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II. UNIT II.. C. Aggregate De mand and Aggregate Supply 1. Equilibrium real GDP and price level with stationary AD and AS 2. The depiction of cyclical unemployment, demand-pull Inflation, and supply-side inflation 3. Aggregate demand stabilization policies

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EQUILIBRIUM REAL GDP AND PRICE LEVEL SHORT RUN

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PRICE LEVEL REAL GDP AS AD EQ. GDP EQ. PRICE LEVEL

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PRICE LEVEL REAL GDP AS AD EQ. GDP EQ. PRICE LEVEL WHAT'S TRUE IN EQUILIBRIUM?

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PRICE LEVEL REAL GDP AS AD EQ. GDP EQ. PRICE LEVEL WHAT'S TRUE IN EQUILIBRIUM? PRICE LEVEL WHERE AGGREGATE QUANTITY SUPPLIED EQUALS AGGREGATE QUANTITY DEMANDED

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PRICE LEVEL REAL GDP AS AD EQ. GDP EQ. PRICE LEVEL WHAT'S TRUE IN EQUILIBRIUM? PRICE LEVEL WHERE AGGREGATE QUANTITY SUPPLIED EQUALS AGGREGATE QUANTITY DEMANDED WE WILL END UP THERE

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PRICE LEVEL REAL GDP AS AD EQ. GDP EQ. PRICE LEVEL NOTHING INHERENTLY GOOD OR BAD ABOUT THE EQUILIBRIUM IT'S SIMPLY WHERE WE WILL END UP

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PRICE LEVEL REAL GDP AD

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PRICE LEVEL REAL GDP AD AGGREGATE

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PRICE LEVEL REAL GDP AS

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PRICE LEVEL REAL GDP AS AGGREGATE

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PRICE LEVEL REAL GDP AS

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FIRST FIVE DETERMINE PRODUCTION COSTS PRODUCTION COST UP----SUPPLY DECREASES, ETC. 1. resource prices 2. technology and/or productivity 3. taxes and subsidies 4. price of other goods (particularly price of production alternatives) 5. expectations (sellers' expectations about future prices) ************************ 6. number of sellers DETERMINANTS OF SUPPLY

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PRICE LEVEL REAL GDP AS

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PRICE LEVEL REAL GDP AS PRODUCTION COSTS UP

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PRICE LEVEL REAL GDP AS

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PRICE LEVEL REAL GDP AS

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PRICE LEVEL REAL GDP AS PRODUCTION COSTS DOWN

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PRICE LEVEL REAL GDP AS

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PRICE LEVEL REAL GDP AS AD EQ. GDP EQ. PRICE LEVEL

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PRICE LEVEL REAL GDP EQ. GDP AS AD EQ. PRICE LEVEL

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PRICE LEVEL REAL GDP AS AD EQ. GDP EQ. PRICE LEVEL

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PRICE LEVEL REAL GDP AS AD EQ. PRICE LEVEL EQ. REAL GDP

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PRICE LEVEL REAL GDP AS AD EQ. GDP EQ. PRICE LEVEL

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PRICE LEVEL REAL GDP AS AD PRICE LEVEL

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PRICE LEVEL REAL GDP AS AD PRICE LEVEL GDP PRODUCED GDP DEMANDED

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PRICE LEVEL REAL GDP AS AD EQ. GDP EQ. PRICE LEVEL

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PRICE LEVEL REAL GDP AS AD PRICE LEVEL GDP DEMANDED GDP PRODUCED

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