Lecture 13: Aggregate Supply and Aggregate Demand

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Lecture 13 Aggregate Supply and Aggregate Demand

• Aggregate supply
• Aggregate Demand
• Shocks

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e
P P (1 ?) F(1-Y/L,z)
AS
P
e
P
Y
Y
n
e
P (t) P(t-1) for now gt
AS P(t) P(t-1) (1 ?)
F(1-Y(t)/L,z)
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Aggregate Demand
IS Y C(Y-T) I(Y,i) G LM M Y
L(i) P
LM P gt P
i
LM
Y
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AD Y Y(M/P, G, T)
-
P
AD
Y
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Aggregate Demand - Aggregate Supply
AS
P
AD
Y
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AD-AS Canonical Shocks
AS
P
AD
Y
Monetary expansion fiscal expansion oil shock
(figs 7-9/7-10/7-11/7-12/7-13)