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

EQUILIBRIUM REAL GDP AND PRICE LEVEL SHORT RUN

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

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

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

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

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

PRICE LEVEL REAL GDP AD

PRICE LEVEL REAL GDP AD AGGREGATE

PRICE LEVEL REAL GDP AS

PRICE LEVEL REAL GDP AS AGGREGATE

PRICE LEVEL REAL GDP AS

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

PRICE LEVEL REAL GDP AS

PRICE LEVEL REAL GDP AS PRODUCTION COSTS UP

PRICE LEVEL REAL GDP AS

PRICE LEVEL REAL GDP AS

PRICE LEVEL REAL GDP AS PRODUCTION COSTS DOWN

PRICE LEVEL REAL GDP AS

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

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

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

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

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

PRICE LEVEL REAL GDP AS AD PRICE LEVEL

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

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

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