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Transcript of CHAPTER 27 Aggregate Supply and Aggregate Demand PowerPoint® Slides by Can Erbil © 2005 Worth...
![Page 1: CHAPTER 27 Aggregate Supply and Aggregate Demand PowerPoint® Slides by Can Erbil © 2005 Worth Publishers, all rights reserved.](https://reader033.fdocuments.us/reader033/viewer/2022061616/56649ebf5503460f94bc9860/html5/thumbnails/1.jpg)
CHAPTER 27
Aggregate Supply and AggregateDemand
PowerPoint® Slides by Can Erbil
© 2005 Worth Publishers, all rights reserved
![Page 2: CHAPTER 27 Aggregate Supply and Aggregate Demand PowerPoint® Slides by Can Erbil © 2005 Worth Publishers, all rights reserved.](https://reader033.fdocuments.us/reader033/viewer/2022061616/56649ebf5503460f94bc9860/html5/thumbnails/2.jpg)
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What you will learn in this chapter:
How the aggregate supply curve illustrates the relationship between the aggregate price level and the quantity of aggregate output supplied in the economy
Why the aggregate supply curve different in the short run compared to the long run
How the aggregate demand curve illustrates the relationship between the aggregate price level and the quantity of aggregate output demanded in the economy
How the AS–AD model is used to analyze economic fluctuations
How monetary policy and fiscal policy can stabilize the economy
![Page 3: CHAPTER 27 Aggregate Supply and Aggregate Demand PowerPoint® Slides by Can Erbil © 2005 Worth Publishers, all rights reserved.](https://reader033.fdocuments.us/reader033/viewer/2022061616/56649ebf5503460f94bc9860/html5/thumbnails/3.jpg)
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The Short-Run Aggregate Supply Curve
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Shifts of the Short-Run Aggregate Supply Curve
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Shifts of the Short-Run Aggregate Supply CurveChanges in
Commodity prices
Nominal wages
Productivity
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Long-Run Aggregate Supply Curve
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Actual and Potential Output
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Economic Growth Shifts the LRAS Curve Rightward
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From the Short Run to the Long Run
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The Aggregate Demand Curve
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Why is the aggregate demand curve downward-sloping?
Wealth effect of a change in the aggregate price level
Interest rate effect of a change in aggregate the price level
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Shifts of the Aggregate Demand CurveChanges in
Expectations
Wealth
Stock of physical capital
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Shifts of the Aggregate Demand Curve
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The Multiplier
The size of the multiplier, 1/1 – MPC, depends on the marginal propensity to consume, MPC: the larger the MPC, the larger the change in real GDP for any given autonomous increase in aggregate spending.
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The Multiplier
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The AS–AD Model
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Shifts of the SRAS Curve
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Shifts of Aggregate Demand: Short-Run Effects
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Long-Run Macroeconomic Equilibrium
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Short-Run Versus Long-Run Effects of a Negative Demand Shock
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Short-Run Versus Long-Run Effects of a Positive Demand Shock
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Negative Supply Shocks
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Macroeconomic Policy
Fiscal policy affects aggregate demand directly through government purchases and indirectly through changes in taxes or government transfers that affect consumer spending. Monetary policy affects aggregate demand indirectly through changes in the interest rate that affect consumer and investment spending.
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The End of Chapter 27
coming attraction:Chapter 28:
Income and Expenditure