Please enable JavaScript.
Coggle requires JavaScript to display documents.
lecture 7: aggregate demand and aggregate supply, oke - Coggle Diagram
lecture 7: aggregate demand and aggregate supply
economic fluctuation and their features
Economic Fluctuations: Prosperity, Recession, Depression, recovery
recession: a period ò declineing income and falling unemployment
depression: a recession
business cycle demonstrate short run fluctuations
aggregate demand and aggregate supply
two variable used to develop model to analyze short-run fluctuations:
output measured by GDP
price level measured by CPI or GDP deflator
AD and AS model: explain short run fluctuations in economic activities around its long run trend.
AD:= C + I + G + NX
Why AD shift? from C, I, G, NX
why AD move? from
the price level and consumption: the wealth effect
the price level and investment: the interest effect
the price level and net export: the exchange-rate effect
AS
long-run: vertical AS curve, depend on resources (land, labor, capital) and technology; LRAS vertical at natural rate of output, potential output, full-unemployment output and shift by L, K, N, and technology knowledge.
short-run: upward sloping AS curve: rise P tend to raise Y
movement:
misperceptions theory
sticky-wage theory
sticky-price theory
shift:
labor (wages)
capital (interest rate)
natural resources (resource availability)
technology
expected price level, P rise, Q of g&s decrease, AS shift left, P fall cause AS shift right
macro- equilibrium: the P of real GDP the equate AS and AD
source of resection
decrease in AD
increase in AD cause output to fall in the short-run, in the long run SRAS shift , and output returns to its natural rate.
short run: shift in AD => fluctuations in the economy output
long run: shift AD the overall price level but not output.
decrease/adverse SRAS
decrease in one of it determinants (L, K, N, technology, P)
An adverse shift in the SRAS curve
cause output to fall
and the price level to rise
Stagflation: a combination of recession (fall in output) and inflation (rise in price level)
cannot offset both of these adverse effects simultaneously
policy response to Session
do nothing and wait for price and wages to adjust
take action to rise AD by using monetary and fiscal policy
AD-AS model and phillips curve (cái mà đo trục tung là inflation còn trục hoành là unemployment, phillip curve giống demand curve donward slopping)
unemployment and inflation
AD-AS model and phillips curve
cost of reducing inflation
misery index: one measure of inflation and unemployment rate
rise AD: low Unemployment but cause inflation
contract (co rút, teo lại)AD: lower inflation but cost is temporarily higher unemployment
the
Philips curve
show the short run combination UNEMPLOYMENT and INFLATION, shift in AD curve move the economic along the short run AS
Fiscal policy
is the use of government spending and taxation to influence the economy.
Contractionary monetary
: reduce Q of g&s that firm produce, lead to rise unemployment
