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short-run economic fluctuations (application of AD-AS model (how fiscal…
short-run economic fluctuations
3 key factors
most macroeconomic variables are closely related and move together
as output falls, unemployment rises
economic fluctuations are irregular and unpredictable
application of AD-AS model
how monetary policy affects AD
change interest rate
the theory of liquidity preference
利率调整是为了平衡供求关系
money supply
fixed by central bank
vertical
money demand
determined by several factors
most important factor: interest rate
central bank
target interest rate
target money supply
lag: takes more than 6 month
how fiscal policy affects AD
long run
influence: saving, investment and growth in the long run
short run
affect: the aggregate demand
overall level of government purchases or taxes
two effects from government purchases
the multiplier effect
Each dollar spent by the government can raise the aggregate demand for goods and services by more than a dollar.
the crowding-out effect
increase government purchases → interest rate increase → higher interest rate reduce investment spending
当财政扩张提高利率时，需求的减少被称为挤出效应。
leg
causes of recession
decrease in AS
stagflation 滞胀
decrease in AD
changes in taxes
policy should
achieve long run goals or high growth and low inflation
leave the economy to deal with short term fluctuations on its own
automatic stabilisers
changes in fiscal policy → AD
include: tax system, some forms of government spending
model of AD-AS
in short run fluctuation, use the AD-AS model
AD: aggregate demand curve
WHY downward-sloping
four components of GDP contribute to the aggregate demand: Y=C+I+G+NX
interest rate effect
the wealth effect
the exchange rate effect
shifts in the AD curve
private behaviour
spending plan
public policy
fiscal or monetary policy
AS: aggregate supply curve
long run curve
depends on the economy's resources and technology
is not affected by inflation rate
vertival
the level of production is referred to as the natural rate of output
shifts factors
labour, capital, natural resources, technology
short-run curve
upward sloping
causes
New classical misperceptions theory
整体价格水平的变化暂时误导了供应商，让他们无法了解在他们销售产品的市场上发生了什么。供应商误以为较低的通胀是较低的相对价格，并通过减少产出作出反应。
The Keynesian sticky-wage theory
名义工资在短期内调整缓慢，或难以调整。
The new Keynesian sticky-price theory
一些商品和服务的价格随着经济条件的变化而缓慢调整。
shifts factors
labour, capital, natural resources, technology
people's expectation of the inflation rate
higher expected inflation rate leads to higher wages
higher wages raise the cost of production
shift the AS curve to the left
long-run equilibrium
总需求曲线与长期总供给曲线的交点决定了经济的均衡产出和价格水平。
money neutrality 货币中性
changes in money supply affect nominal variables but not real variables in the long run
money neutrality assumption not appropriate in the short-run
the economy in the long run VS short run
long run
output is determined by: capital, labour, the available production technology
interest rate：adjust to balance supply and demand for loanable funds
the inflation rate: adjust to balance the supply and demand for money in the long run
short run
price level is predetemined
interest rate balances supply of and demand for money
output responds to changed in AD