Презентация Aggregated supply and demand онлайн

Содержание слайда: Macroeconomics aggregated supply and demand Zharova Liubov

Содержание слайда: Aggregate Demand (AD) Aggregate demand is the total demand for goods and services is an economic measurement of the sum of all final goods and services produced in an economy, expressed as the total amount of money exchanged for those goods and services.

Содержание слайда: AD shifts AD = C+I+G+NX change in consumption (eg cut tax)

Содержание слайда: Components of AS Consumer goods. Private consumer goods and services, such as motor vehicles, computers, clothes and entertainment, are supplied by the private sector,  and consumed by households. Capital goods. Capital goods, such as machinery, equipment, and plant, are supplied to other firms. Public and merit goods. Goods and services produced by private firms for use by central or local government, such as education and healthcare, are also a significant component of aggregate supply.  Traded goods. Goods and services for export, such as chemicals, entertainment, and financial services are also a key component of aggregate supply.

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Содержание слайда: Sort-run Aggregate Supply (SRAS) Rising the price – labor pool, work more, less vacation… Decreasing price – more leisure time…

Содержание слайда: Summirising Aggregate supply is the total quantity of output firms will produce and sell – in other words, the real GDP. The upward-sloping aggregate supply curve – also known as the short run aggregate supply curve – shows the positive relationship between price level and real GDP in the short run. The aggregate supply curve slopes up because when the price level for outputs increases while the price level of inputs remains fixed, the opportunity for additional profits encourages more production. Potential GDP, or full-employment GDP, is the maximum quantity that an economy can produce given full employment of its existing levels of labor, physical capital, technology, and institutions. Aggregate demand is the amount of total spending on domestic goods and services in an economy. The downward-sloping aggregate demand curve shows the relationship between the price level for outputs and the quantity of total spending in the economy.

Содержание слайда: Equilibrium in the aggregate demand/aggregate supply model At a relatively low price level for output, firms have little incentive to produce, although consumers would be willing to purchase a high quantity. As the price level for outputs rises, aggregate supply rises and aggregate demand falls until the equilibrium point is reached.

Содержание слайда: Price level: aggregate demand/aggregate supply

Содержание слайда: Example Bebebe. The imaginary country of Bebebe has the aggregate supply and aggregate demand curves given in the table below. Plot an AD/AS diagram from the data above. Identify the equilibrium. Would you expect unemployment in this economy to be relatively high or low? Would you expect concern about inflation in this economy to be relatively high or low? Imagine that consumers begin to lose confidence about the state of the economy, so AD becomes lower by 275 at every price level. Identify the new aggregate equilibrium. How will the shift in AD affect the original output, price level, and employment?

Содержание слайда: How productivity growth shifts the AS curve Over time, productivity grows so that the same quantity of labor can produce more output. Historically, the real growth in GDP per capita in an advanced economy like the United States has averaged about 2% to 3% per year, but productivity growth has been faster during certain extended periods. A higher level of productivity shifts the SRAS curve to the right because with improved productivity, firms can produce a greater quantity of output at every price level.

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Содержание слайда: Summary The aggregate demand/aggregate supply model is a model that shows what determines total supply or total demand for the economy and how total demand and total supply interact at the macroeconomic level. Movements of either the aggregate supply or aggregate demand curve in an AD/AS diagram will result in a different equilibrium output and price level. The aggregate supply curve shifts to the right as productivity increases or the price of key inputs falls, making a combination of lower inflation, higher output, and lower unemployment possible. The aggregate supply curve shifts to the left as the price of key inputs rises, making a combination of lower output, higher unemployment, and higher inflation possible. When an economy experiences stagnant growth and high inflation at the same time it is referred to as stagflation.

Содержание слайда: How do changes by consumers and firms affect AD? When consumers feel more confident about the future of the economy, they tend to consume more. If business confidence is high, then firms tend to spend more on investment, believing that the future payoff from that investment will be substantial. On the other hand, if consumer or business confidence drops, then consumption and investment spending decline. Consumer and business confidence often reflect macroeconomic realities. For example, confidence is usually high when the economy is growing briskly and low during a recession. However, economic confidence can sometimes rise or fall due to factors that do not have a close connection to the immediate economy, like a risk of war, election results, foreign policy events, or a pessimistic prediction about the future by a prominent public figure.

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Содержание слайда: During a recession, when unemployment is high and many businesses are suffering low profits or even losses, the US Congress often passes tax cuts. During the recession of 2001, for example, a tax cut was enacted into law. At such times, the political rhetoric often focuses on how people going through hard times need relief from taxes. The aggregate supply and aggregate demand framework, however, offers a complementary rationale. During a recession, when unemployment is high and many businesses are suffering low profits or even losses, the US Congress often passes tax cuts. During the recession of 2001, for example, a tax cut was enacted into law. At such times, the political rhetoric often focuses on how people going through hard times need relief from taxes. The aggregate supply and aggregate demand framework, however, offers a complementary rationale.

Содержание слайда: Summary The aggregate demand/aggregate supply model is a model that shows what determines total supply or total demand for the economy and how total demand and total supply interact at the macroeconomic level. The aggregate demand curve shifts to the right as the components of aggregate demand–consumption spending, investment spending, government spending, and spending on exports minus imports–rise. The AD curve will shift back to the left as these components fall. AD components can change because of different personal choices–like those resulting from consumer or business confidence–or from policy choices like changes in government spending and taxes. If the AD curve shifts to the right, then the equilibrium quantity of output and the price level will rise. If the AD curve shifts to the left, then the equilibrium quantity of output and the price level will fall. Whether equilibrium output changes relatively more than the price level or whether the price level changes relatively more than output is determined by where the AD curve intersects with the AS curve.