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Module Aggregate Supply: Introduction and Determinants KRUGMAN'S MACROECONOMICS for AP* 18 Margaret Ray and David Anderson

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Page 1: Module Aggregate Supply: Introduction and Determinants KRUGMAN'S MACROECONOMICS for AP* 18 Margaret Ray and David Anderson

ModuleAggregate Supply:Introduction andDeterminants

KRUGMAN'SMACROECONOMICS for AP*

18

Margaret Ray and David Anderson

Page 2: Module Aggregate Supply: Introduction and Determinants KRUGMAN'S MACROECONOMICS for AP* 18 Margaret Ray and David Anderson

Modules 18 & 19Aggregate supply and equilibrium

ReadingReading

Page 3: Module Aggregate Supply: Introduction and Determinants KRUGMAN'S MACROECONOMICS for AP* 18 Margaret Ray and David Anderson

What you will learnWhat you will learn

in thisin this ModuleModule::

• How the aggregate supply curve illustrates the relationship between the aggregate price level and the quantity of aggregate output supplied in the economy

• What factors can shift the aggregate supply curve

• Why the aggregate supply curve is different in the short run from in the long run

Page 4: Module Aggregate Supply: Introduction and Determinants KRUGMAN'S MACROECONOMICS for AP* 18 Margaret Ray and David Anderson

• The relationship between the price level and the real GDP supplied

Aggregate SupplyAggregate Supply

Page 5: Module Aggregate Supply: Introduction and Determinants KRUGMAN'S MACROECONOMICS for AP* 18 Margaret Ray and David Anderson

Short-Run Aggregate Supply Short-Run Aggregate Supply Curve (SRAS)Curve (SRAS)

Why does it slope upwards?

Page 6: Module Aggregate Supply: Introduction and Determinants KRUGMAN'S MACROECONOMICS for AP* 18 Margaret Ray and David Anderson

Sticky Nominal WagesSticky Nominal Wages

• Nominal wage = what you get paid in current dollars. Not real wage.

• Why are nominal wages “sticky”?

• What would you do if prices went up by 1% this month.

Page 7: Module Aggregate Supply: Introduction and Determinants KRUGMAN'S MACROECONOMICS for AP* 18 Margaret Ray and David Anderson

Sticky Nominal WagesSticky Nominal Wages

• Price level increases.

• Nominal wages don’t rise as fast.

• Business profits increase.

• Hire more workers, produce more.

Page 8: Module Aggregate Supply: Introduction and Determinants KRUGMAN'S MACROECONOMICS for AP* 18 Margaret Ray and David Anderson

Sticky Nominal WagesSticky Nominal Wages

• Price level decreases.

• Nominal wages don’t fall as fast.

• Business profits decrease.

• Layoff workers, produce less..

Page 9: Module Aggregate Supply: Introduction and Determinants KRUGMAN'S MACROECONOMICS for AP* 18 Margaret Ray and David Anderson

Shifts of the Short-Run Shifts of the Short-Run Aggregate Supply CurveAggregate Supply Curve

• ∆ Commodity Prices

• ∆ Nominal Wages

• ∆ Productivity

Page 10: Module Aggregate Supply: Introduction and Determinants KRUGMAN'S MACROECONOMICS for AP* 18 Margaret Ray and David Anderson

Team activity – SRAS ShiftsTeam activity – SRAS Shifts

• Left side shift out, right side shift in.

• Team 1 – commodity prices

• Team 2 – nominal wages

• Team 3 - productivity

Page 11: Module Aggregate Supply: Introduction and Determinants KRUGMAN'S MACROECONOMICS for AP* 18 Margaret Ray and David Anderson

Individual – SRAS ShiftsIndividual – SRAS Shifts

• Activity # 24 – SRAS scenarios

Page 12: Module Aggregate Supply: Introduction and Determinants KRUGMAN'S MACROECONOMICS for AP* 18 Margaret Ray and David Anderson

The Long-Run Aggregate The Long-Run Aggregate Supply CurveSupply Curve

• Flexible Wages

• Long Run

• LRAS

• Potential Output

• Factors that shift LRAS!

Page 13: Module Aggregate Supply: Introduction and Determinants KRUGMAN'S MACROECONOMICS for AP* 18 Margaret Ray and David Anderson

What factors shift the LRAS?What factors shift the LRAS?

Create a Word Wall

Page 14: Module Aggregate Supply: Introduction and Determinants KRUGMAN'S MACROECONOMICS for AP* 18 Margaret Ray and David Anderson

From the Short Run to the From the Short Run to the Long RunLong Run

Page 15: Module Aggregate Supply: Introduction and Determinants KRUGMAN'S MACROECONOMICS for AP* 18 Margaret Ray and David Anderson

SummarySummary

SRAS Change in Quantity of Output

Shift in SRAS Shift in LRAS

Sticky nominal wages

Business profits.

Fluctuations in:

Commodity prices

Nominal Wages

Productivity

Exogenous shocks

Permanent growth:

More resources

Human capital

Technology

Page 16: Module Aggregate Supply: Introduction and Determinants KRUGMAN'S MACROECONOMICS for AP* 18 Margaret Ray and David Anderson

Exit TicketExit Ticket

• Aggregate Supply Scenarios


Pump Primer : Define the “Rule of 70.” 37. Module Long-run Economic Growth KRUGMAN'S MACROECONOMICS for AP* 37 Margaret Ray and David Anderson

Module Saving, Investment, and the Financial System KRUGMAN'S MACROECONOMICS for AP* 22 Margaret Ray and David Anderson

ECN202: Macroeconomics Introduction to Macroeconomics

Pump Primer : Define monetary policy. 31. Module Monetary Policy and the Interest Rate KRUGMAN'S MACROECONOMICS for AP* 31 Margaret Ray and David Anderson

Module The Foreign Exchange Market KRUGMAN'S MACROECONOMICS for AP* 42 Margaret Ray and David Anderson

Module Types of Inflation, Disinflation, and Deflation KRUGMAN'S MACROECONOMICS for AP* 33 Margaret Ray and David Anderson

KRUGMAN'S MICROECONOMICS for AP* Utility Maximization Margaret Ray and David Anderson Micro: Econ: 15 51 Module

Module Monetary Policy and the Interest Rate KRUGMAN'S MACROECONOMICS for AP* 31 Margaret Ray and David Anderson

Module The Meaning and Calculation of Unemployment KRUGMAN'S MACROECONOMICS for AP* 12 Margaret Ray and David Anderson

Module Supply and Demand: Supply and Equilibrium KRUGMAN'S MACROECONOMICS for AP* 6 Margaret Ray and David Anderson

Module Inflation and Unemployment: The Phillips Curve KRUGMAN'S MACROECONOMICS for AP* 34 Margaret Ray and David Anderson

Module Supply and Demand: Introduction and Demand KRUGMAN'S MACROECONOMICS for AP* 5 Margaret Ray and David Anderson

KRUGMAN'S MICROECONOMICS for AP* Introduction to Market Structure Margaret Ray and David Anderson Micro: Econ: 21 57 Module

Module Equilibrium in the Aggregate Demand- Aggregate Supply Model KRUGMAN'S MACROECONOMICS for AP* 19 Margaret Ray and David Anderson

KRUGMAN'S MICROECONOMICS for AP* Factor Markets: Introduction and Factor Demand Margaret Ray and David Anderson Econ: 69 Module

Module Capital Flows and the Balance of Payments KRUGMAN'S MACROECONOMICS for AP* 41 Margaret Ray and David Anderson

Module Comparative Advantage and Trade KRUGMAN'S MACROECONOMICS for AP* 4 Margaret Ray and David Anderson

KRUGMAN'S MACROECONOMICS for AP* 8 Margaret Ray and David Anderson Module Supply and Demand: Price Controls (Ceilings and Floors)

Pump Primer : Define Keynesian Economics.. Module History and Alternative Views of Macroeconomics KRUGMAN'S MACROECONOMICS for AP* 35 Margaret Ray and

Macroeconomics II - is.muni.cz · Macroeconomics II Ondřej Krčál ... Important issues in macroeconomics ... CHAPTER 1 The Science of Macroeconomics slide 25

Module The Production Possibilities Curve Model KRUGMAN'S MACROECONOMICS for AP* 3 Margaret Ray and David Anderson

KRUGMAN'S MICROECONOMICS for AP* The Income Effect, Substitution Effect, and Elasticity Margaret Ray and David Anderson 46 Econ: Module

Macroeconomics 1. Introduction to Macroeconomics …rainer-maurer.com/mediapool/90/903602/data/Macroeconomics/AU_1... · Macroeconomics 1. Introduction to Macroeconomics Lecture Notes:

KRUGMAN'S MICROECONOMICS for AP* Theories of Income Distribution Margaret Ray and David Anderson Micro: Econ: 37 73 Module

KRUGMAN'S MICROECONOMICS for AP* Defining Profit Margaret Ray and David Anderson Micro: Econ: 16 52 Module

KRUGMAN'S MACROECONOMICS for AP* Module The Study of Economics 1 Margaret Ray and David Anderson

KRUGMAN'S MACROECONOMICS for AP* 29 Margaret Ray and David Anderson Module The Market for Loanable Funds

Module The Measurement and Calculation of Inflation KRUGMAN'S MACROECONOMICS for AP* 15 Margaret Ray and David Anderson

Module Putting it All Together KRUGMAN'S MACROECONOMICS for AP* 45 Margaret Ray and David Anderson

Introduction MACROECONOMICS MACROECONOMICS Dr. Nimantha Manamperi

Module Growth Policy: Why Economic Growth Rates Differ KRUGMAN'S MACROECONOMICS for AP* 39 Margaret Ray and David Anderson

Module History and Alternative Views of Macroeconomics KRUGMAN'S MACROECONOMICS for AP* 35 Margaret Ray and David Anderson John Maynard Keynes & Milton

KRUGMAN'S MICROECONOMICS for AP* Consumer and Producer Surplus Margaret Ray and David Anderson Micro: Econ: 13 49 Module

KRUGMAN'S MACROECONOMICS for AP* 30 Margaret Ray and David Anderson Module Long-run Implications of Fiscal Policy: Deficits and the Public Debt

KRUGMAN'S MICROECONOMICS for AP* Introduction to Externalities Margaret Ray and David Anderson Econ: 74 Module