Chapter 33

Slides

VNP-Econ-Chapter 33
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33-4e Why the Short-Run Aggregate-Supply Curve Might Shift

The short-run aggregate-supply curve tells us the quantity of goods and services supplied in the short run for any given level of prices. This curve is similar to the long-run aggregate-supply curve, but it is upward sloping rather than vertical because of sticky wages, sticky prices, and misperceptions. Thus, when thinking about what shifts the […]

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33-4d Why the Aggregate-Supply Curve Slopes Upward in the Short Run

The key difference between the economy in the short run and in the long run is the behavior of aggregate supply. The long-run aggregate-supply curve is vertical because, in the long run, the overall level of prices does not affect the economy’s ability to produce goods and services. By contrast, in the short run, the […]

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33-4c Using Aggregate Demand and Aggregate Supply to Depict Long-Run Growth and Inflation

Having introduced the economy’s aggregate-demand curve and the long-run aggregate-supply curve, we now have a new way to describe the economy’s long-run trends. Figure 5 illustrates the changes that occur in an economy from decade to decade. Notice that both curves are shifting. Although many forces influence the economy in the long run and can […]

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33-4b Why the Long-Run Aggregate-Supply Curve Might Shift

Because classical macroeconomic theory predicts the quantity of goods and services produced by an economy in the long run, it also explains the position of the long-run aggregate-supply curve. The long-run level of production is sometimes called potential output or full-employment output. To be more precise, we call it the natural level of output because […]

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33-4a Why the Aggregate-Supply Curve Is Vertical in the Long Run

What determines the quantity of goods and services supplied in the long run? We implicitly answered this question earlier in the book when we analyzed the process of economic growth. In the long run, an economy’s production of goods and services (its real GDP) depends on its supplies of labor, capital, and natural resources and […]

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33-4 The Aggregate-Supply Curve

The aggregate-supply curve tells us the total quantity of goods and services that firms produce and sell at any given price level. Unlike the aggregate-demand curve, which always slopes downward, the aggregate-supply curve shows a relationship that depends crucially on the time horizon examined. In the long run, the aggregate-supply curve is vertical, whereas in […]

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33-3b Why the Aggregate-Demand Curve Might Shift

The downward slope of the aggregate-demand curve shows that a fall in the price level raises the overall quantity of goods and services demanded. Many other factors, however, affect the quantity of goods and services demanded at a given price level. When one of these other factors changes, the quantity of goods and services demanded […]

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33-3a Why the Aggregate-Demand Curve Slopes Downward

Why does a change in the price level move the quantity of goods and services demanded in the opposite direction? To answer this question, it is useful to recall that an economy’s GDP (which we denote as Y) is the sum of its consumption (C), investment (I), government purchases (G), and net exports (NX): Y […]

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