PPT-A Dynamic Model of Aggregate Demand and Aggregate Supply

Chapter 15 of Macroeconomics 8 th edition by N Gregory Mankiw ECO62 Udayan Roy PART V Topics in Macroeconomic Theory Inflation and dynamics in the short run So far to analyze the short run we have used. Introduction to Demand. In the United States, the forces of supply and demand work together to set prices. . Demand. is the desire, willingness, and ability to buy a good or service.. one individual consumer OR. Aggregate expenditure line. Real GDP demanded. Changes in aggregate expenditure. Simple spending multiplier. Changes in the price level. Aggregate demand curve. Components of aggregate expenditure (AE). 12. McGraw-Hill/Irwin. Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.. Aggregate Demand. Real GDP desired at each price level. Inverse relationship. Real balances effect. Chapter . 15 . of . Macroeconomics. , . 8. th. . edition, by N. Gregory . Mankiw. ECO62. . Udayan. . Roy. PART V Topics in Macroeconomic Theory. Inflation and dynamics in the short run. So far, to analyze the short run we have used. Demand. Principle of Effective Demand is the pillar of Keynesian Theory of Employment. Dillard considers the principle of effective demand to be the logical starting point of Keynesian Theory of Employment.. odel. KRUGMAN'S. MACROECONOMICS for . AP*. 20. Margaret Ray and David Anderson . What you will learn. in this. . Module. :. How the AD-AS model is used to formulate macroeconomic policy. The rationale for stabilization policy. Today:. Aggregate demand. Why is it downward sloping?. Factors that affect the aggregate demand. Aggregate supply. Long-run aggregate supply. Short-run aggregate supply. Why is it upward sloping?. Factors that affect the short-run aggregate supply. Aggregate Supply. Learning Objectives. Define the aggregate demand curve. Explain why it slopes downward. Explain why it shifts. Define the aggregate supply curve. Explain why it slopes downward. Explain why it shifts. Day 1. Q1: During the Great Depression we saw a rise in unemployment and deflation. In the recession of 1979-1982 a rise in unemployment but inflation. Why?. Q2: What is stagflation?. Aggregate Supply and Aggregate Demand. Essential Question:. What are demand and supply, and what factors influence them?. Demand and price. Demand comes at a price. . Burger. . . Quantity. demanded . – amount of a good/service consumers are willing to pay . Short-run Aggregate Supply (SRAS). SRAS. shows the relationship between the economy’s aggregate price level and the total quantity of final goods and services (aggregate output or RGDP) producers are willing to supply.. . Adam . smith, credited by many as the founder of classical economics believed the government should intervene in economic affairs as little as possible. John Maynard Keynes asked, “If supply creates its own demand, why are we having a worldwide depression?”. Class : B.Com-I (IInd Semester). Subject : Macro Economics. Topic : Keynesian Theory of Output. College: IB (PG) College, Panipat. (Affiliated to Kurukshetra University, . . Paper: Introductory Macroeconomics. Unit: 4. Prepared by. Anindita. . Chakravarty. There are two main causes of . inflation. . Both . are responsible for a . general rise in prices . in an . economy.