aggregate demand and aggrate supply (總需求與總供給)

1、How the aggregate demand curve illustrates the relationship between the aggregate price level and the quantity of aggregate output demanded in the economyHow the aggregate supply curve illustrates the relationship between the aggregate price level and the quantity of aggregate output supplied in the

2、 economyWhy the aggregate supply curve in the short run is different from the aggregate supply curve in the long runHow the ASAD model is used to analyze economic fluctuationsHow monetary policy and fiscal policy can stabilize the economy The aggregate demand curve shows the relationship between the

3、 aggregate price level and the quantity of aggregate output demanded by households, businesses, the government and the rest of the world.7.919330716Real GDP (billions of 2005 dollars)Aggregate pricelevel (GDP deflator,2005 = 100)Aggregate demand curve, ADA movement down theAD curve leads to a lowera

4、ggregate price level andhigher aggregate output.10004.2 It is downward-sloping for two reasons: The first is the wealth effect of a change in the aggregate price levela higher aggregate price level reduces the purchasing power of households wealth and reduces consumer spending. The second is the int

5、erest rate effect of a change in aggregate the price levela higher aggregate price level reduces the purchasing power of households money holdings, leading to a rise in interest rates and a fall in investment spending and consumer spending.Y1E1AEPlannedAEPlanned1Plannedaggregatespending45-degree lin

6、eReal GDPY2E2AEPlannedAEPlanned2(a) Change in Income-Expenditure Equilibrium(b) Aggregate DemandPlanned Aggregate SpendingAggregate Price Level45-degree lineAEPlanned1E2E1AEPlanned2ADP1P2Y1Y2Real GDPReal GDP The aggregate demand curve shifts because of: changes in expectations wealth the stock of ph

7、ysical capital government policiesfiscal policymonetary policyAD1AD1AD2AD2Real GDPReal GDPAggregate price level(a) Rightward Shift(b) Leftward ShiftAggregate price levelIncrease in aggregate demandDecrease in aggregate demand Changes in expectationsIf consumers and firms become more optimistic, aggr

8、egate demand increases.If consumers and firms become more pessimistic, aggregate demand decreases. Changes in wealthIf the real value of household assets rises, aggregate demand increases.If the real value of household assets falls, aggregate demand decreases. Size of the existing stock of physical

9、capitalIf the existing stock of physical capital is relatively small, aggregate demand increases.If the existing stock of physical capital is relatively large, aggregate demand decreases. Fiscal policyIf the government increases spending or cuts taxes, aggregate demand increases.If the government re

10、duces spending or raises taxes, aggregate demand decreases. Monetary policyIf the central bank increases the quantity of money, aggregate demand increases.If the central bank reduces the quantity of money, aggregate demand decreases The aggregate supply curve shows the relationship between the aggre

11、gate price level and the quantity of aggregate output in the economy. The short-run aggregate supply curve is upward-sloping because nominal wages are sticky in the short run: A higher aggregate price level leads to higher profits and increased aggregate output in the short run. The nominal wage is

12、the dollar amount of the wage paid. Sticky wages are nominal wages that are slow to fall even in the face of high unemployment and slow to rise even in the face of labor shortages.0976Real GDP (billions of 2005 dollars)Aggregate pricelevel (GDP deflator,2005 = 100)Short-run aggregatesupply curve, SR

13、AS10.619297.91933 716A movement downthe SRAS curve leadsto deflation and loweraggregate output.Real GDPAggregate price levelAggregate price levelReal GDPSRAS2Decrease in short-runaggregate supplyIncrease in short-run aggregate supply(a) Leftward Shift(b) Rightward ShiftSRAS1SRAS1SRAS2Changes in comm

14、odity prices nominal wages productivity lead to changes in producers profits and shift the short-run aggregate supply curve. Changes in commodity pricesIf commodity prices fall, short-run aggregate supply increases.If commodity prices rise, short-run aggregate supply decreases. Changes in nominal wa

15、gesIf nominal wages fall, short-run aggregate supply increases.If nominal wages rise, short-run aggregate supply decreases. Changes in productivityIf workers become more productive, short-run aggregate supply increases.If workers become less productive, short-run aggregate supply decreases. The long

16、-run aggregate supply curve shows the relationship between the aggregate price level and the quantity of aggregate output supplied that would exist if all prices, including nominal wages, were fully flexible.15.00$800Real GDP (billions of 2005 dollars)Aggregate pricelevel (GDP deflator,2005 = 100)Po

17、tentialoutput, YPLong-run aggregatesupply curve, LRAS7.5A fall in theaggregateprice levelleaves the quantityof aggregate outputsupplied unchangedin the long run.Y1YPP1LR ASSR AS1Y1YPP1SR AS1LR ASA1Real GDPAggregate price levelReal GDPAggregate price levelSRAS2A rise in nominalwages shifts SRAS leftw

18、ard.SRAS2A fall in nominalwages shifts SRAS rightward.(a) Leftward Shift of the Short-RunAggregate Supply Curve(b) Rightward Shift of the Short-RunAggregate Supply CurveA1 The ASAD model uses the aggregate supply curve and the aggregate demand curve together to analyze economic fluctuations. The eco

19、nomy is in short-run macroeconomic equilibrium when the quantity of aggregate output supplied is equal to the quantity demanded. The short-run equilibrium aggregate price level is the aggregate price level in the short-run macroeconomic equilibrium. Short-run equilibrium aggregate output is the quan

20、tity of aggregate output produced in the short-run macroeconomic equilibrium.YEPEESRSRASADReal GDPAggregate price levelShort-run macroeconomic equilibriumY22P2AD2A negative demand shock.Y1E1EAD1Y12E1AD1P1P1Real GDPAggregate price levelReal GDPAggregate price level.leads to a lower aggregate price le

21、vel and lower aggregate output.leads to a higheraggregate pricelevel and higheraggregate output.(a) A Negative Demand Shock(b) A Positive Demand ShockEP2Y2AD2A positive demand shock.SRASSRASP1ADY1E1Real GDPAggregate price level(a) A Negative Supply ShockSRAS 1SRASY22EP2 2Y11ADE 2ESRASP1Real GDPAggre

22、gate price level(b) A Positive Supply ShockP2Y2SRAS 21A negative supply shock.leads to a lower aggregate output and a higher aggregate price level.leads to a higheraggregate output and lower aggregate price level.A positive supply shock. The economy is in long-run macroeconomic equilibrium when the

23、point of short-run macroeconomic equilibrium is on the long-run aggregate supply curve.YPPESRASLRASADELRReal GDPAggregate price levelLong-run macroeconomic equilibriumPotential outputY1PE12SRAS1LRASAD1Real GDPAggregate price levelPotentialoutputE3P3SRAS23. until an eventualfall in nominal wagesin th

24、e long run increasesshort-run aggregate supplyand moves the economyback to potential output.22. reduces the aggregate price level and aggregate output and leads to higher unemployment in the short runAD2Recessionary gapY2E1. An initialnegativedemand shock1PReal GDPAggregate price levelLRASY1Potentia

25、l outputAD1SRAS1E1P1AD2E2E3P2P3Y2SRAS21. Originally the economy is at E1.2. A negative demand shock shifts the AD curve to the left, 3. reducing both the aggregate price level and aggregate output and leading to higher unemployment in the short run.Recessionary gap4. Eventually in the long run, the

26、fall in nominal wages increases the SRAS curve and moves the economy back to potential output.Y1P3E3E1P1PSRAS1LRASADReal GDPAggregate price levelPotentialoutputSRAS23. until an eventual rise in nominal wages in the long run reduces short-run aggregate supply and moves the economy back to potential o

27、utput.AD21. An initial positive demand shockInflationary gapY22E22. increases theaggregate price leveland aggregate outputand reduces unemploymentin the short run1Real GDPAggregate price levelLRASY1Potential outputAD2SRAS2E3P3AD1E2E1P2P1Y2SRAS11. Originally the economy is at E1.2. A positive demand

28、shock shifts the AD curve to the right, 3. raising both the aggregate price level and aggregate output and leading to lower unemployment in the short run.Inflationary gap4. Eventually in the long run, the rise in nominal wages decreases the SRAS curve and moves the economy back to potential output.

29、There is a recessionary gap when aggregate output is below potential output. There is an inflationary gap when aggregate output is above potential output. The output gap is the percentage difference between actual aggregate output and potential output. The economy is self-correcting when shocks to a

30、ggregate demand affect aggregate output in the short run, but not the long run. Negative supply shocks pose a policy dilemma: a policy that stabilizes aggregate output by increasing aggregate demand will lead to inflation, but a policy that stabilizes prices by reducing aggregate demand will deepen

31、the output slump. Economy is self-correcting in the long run. Most economists think it takes a decade or longer! John Maynard Keynes: “In the long run we are all dead.” Stabilization policy is the use of government policy to reduce the severity of recessions and rein in excessively strong expansions

32、. The high cost in terms of unemployment of a recessionary gap and the future adverse consequences of an inflationary gap Active stabilization policy, using fiscal or monetary policy to offset shocks. Policy in the face of supply shocks: There are no easy policies to shift the short-run aggregate su

33、pply curve. Policy dilemma: a policy that counteracts the fall in aggregate output by increasing aggregate demand will lead to higher inflation, but a policy that counteracts inflation by reducing aggregate demand will deepen the output slump. “Fear the Boom and Bust”: Hayek versus Keynes Rap Anthem

34、 http:/ The aggregate demand curve shows the relationship between the aggregate price level and the quantity of aggregate output demanded.2. The aggregate demand curve is downward sloping for two reasons. The first is the wealth effect of a change in the aggregate price levela higher aggregate price

35、 level reduces the purchasing power of households wealth and reduces consumer spending. The second is the interest rate effect of a change in the aggregate price levela higher aggregate price level reduces the purchasing power of households and firms money holdings, leading to a rise in interest rat

36、es and a fall in investment spending and consumer spending.3. The aggregate demand curve shifts because of changes in expectations, changes in wealth not due to changes in the aggregate price level, and the effect of the size of the existing stock of physical capital. Policy makers can use fiscal po

37、licy and monetary policy to shift the aggregate demand curve.4. The aggregate supply curve shows the relationship between the aggregate price level and the quantity of aggregate output supplied.5. The short-run aggregate supply curve is upward sloping because nominal wages are sticky in the short ru

38、n: a higher aggregate price level leads to higher profit per unit of output and increased aggregate output in the short run.6. Changes in commodity prices, nominal wages, and productivity lead to changes in producers profits and shift the short-run aggregate supply curve. 7. In the long run, all pri

39、ces are flexible and the economy produces at its potential output. If actual aggregate output exceeds potential output, nominal wages will eventually rise in response to low unemployment and aggregate output will fall. If potential output exceeds actual aggregate output, nominal wages will eventuall

40、y fall in response to high unemployment and aggregate output will rise. So the long-run aggregate supply curve is vertical at potential output.8.In the ADAS model, the intersection of the short-run aggregate supply curve and the aggregate demand curve is the point of short-run macroeconomic equilibr

41、ium. It determines the short-run equilibrium aggregate price level and the level of short-run equilibrium aggregate output. 9.Economic fluctuations occur because of a shift of the aggregate demand curve (a demand shock) or the short-run aggregate supply curve (a supply shock). A demand shock causes

42、the aggregate price level and aggregate output to move in the same direction as the economy moves along the short-run aggregate supply curve. A supply shock causes them to move in opposite directions as the economy moves along the aggregate demand curve. A particularly nasty occurrence is stagflatio

43、ninflation and falling aggregate outputwhich is caused by a negative supply shock.10. Demand shocks have only short-run effects on aggregate output because the economy is self-correcting in the long run. In a recessionary gap, an eventual fall in nominal wages moves the economy to long-run macroecon

44、omic equilibrium, where aggregate output is equal to potential output. In an inflationary gap, an eventual rise in nominal wages moves the economy to long-run macroeconomic equilibrium. We can use the output gap, the percentage difference between actual aggregate output and potential output, to summ