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Lecture materials for Topic 5: AD/AS
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Econ 2020, Topic 5
1.
AD/AS Model
Spring 2013 Topic 5
2.
The PPF (again) 2
dimensional model Shifters
3.
LRAS Curve Reducing two
dimensions to one
4.
LRAS Curve Reducing two
dimensions to one Regions
5.
LRAS Curve Reducing two
dimensions to one Regions Shifters
6.
LRAS Curve Reducing two
dimensions to one Regions Shifters Pre-Keynesian understanding of production A static model of a dynamic economy
7.
The circular flow
(again) Basic model
8.
The circular flow
(again) Basic model Full(er) model Leakages Injections
9.
The circular flow
(again) Basic model Full(er) model Size determines Nominal GDP ∑ PxQ
10.
AD Curve
11.
AD Curve Slope
Real Balances Effect Interest Rate Effect Foreign Purchases Effect
12.
AD Curve Slope Shifters
Leakages Injections
13.
LR Equilibrium Intersection of
LRAS/AD Examples of change Consumer confidence Tax rates Government expenditures Money supply
14.
LR Equilibrium Intersection of
LRAS/AD Examples of change Labor force Regulations Technology change
15.
Does this match
reality?
16.
SRAS Curve Constant input
costs Wages Energy prices
17.
SRAS Curve Constant input
costs Why might they be constant? Sticky wage theory
18.
SRAS Curve Constant input
costs Why might they be constant? Diminishing marginal productivity Effect on per unit costs?
19.
SRAS Curve
20.
SRAS Curve Shifters
Factors of production Costs of production
21.
SR Equilibrium
22.
SR Equilibrium Examples of
change Tax rates Interest rates Labor force Oil prices
23.
Self correcting mechanism
24.
Self correcting mechanism
25.
Examples Government spending Money supply Investor
confidence
26.
A special case:
OPEC Stagflation
27.
The Great Recession
28.
The Great Recession Government
policy changes Technological changes Regulatory changes Behavioral changes