Chapter 12. Aggregate Demand and Aggregate Supply

Link to syllabus

Skip “Why the AD Curve is Downward Sloping;’ pp. 343-44 and Figures 12-2, 12-3

The AD-AS Model. Fig. 12-11, p. 361

Shifts of Aggregate Demand Fig. 12-4, p. 346

Factors that Shift Aggregate Demand, pp. 346-47.

Expectations

Wealth

Investment (and physical capital)

Fiscal Policy

Monetary Policy

Shifts of Aggregate Supply. Fig 12-6, p. 353.

The Short Run AS Curve in the Depression. Fig 12-5 p. 352

Factors Shifting Short Run Aggregate Supply. pp. 353-55

Commodity Prices,

Nominal Wages,

Productivity

Book doesn’t specifically mention here, but could,

‘Supply side’ factors such as gov’t regulation and business taxes.

The AD-AS Model. Fig. 12-11, p. 361

Long Run Macroeconomic Model. Fig. 12-14, p. 365

Long Run Aggregate Supply. Fig. 12-7, p. 356

Actual and Potential Output. Fig 12-8 p. 357

From the Short Run to the Long Run. Fig 12-9, p. 359

At A1, there is excess demand, eventually raising prices and wages, which will push the SRAS curve up and to the left.

Opposite story. At this A1there is unemployment,and eventually wages fall,pushing SRAS down and to the left.

Figure 12.12, p. 362. Demand Shocks.

These are the short run impacts. Long run impacts are treated later.

Supply Shocks. Figure 12.13, p. 363.

Short-Run vs. Long-Run Effects of a Negative Demand Shock. Fig 12-15, p. 365

Short-Run versus Long Run Effects of a Positive Demand Shock. Figure 12.16 p. 367

Global Comparison: Supply Shocks (p. 364)

Global Comparison. P. 338 Previous Edition. The Supply Shock of 2007-08.

Negative Supply Shocks are Rare, and Nasty. Fig 12-17, p. 368.

Has Stabilization Policy been Stabilizing? Fig. 12-18, p. 371.