Eco 6351 Economics for Managers Chapter 11c. Aggregate Supply and Demand - PowerPoint PPT Presentation

1 / 12
About This Presentation
Title:

Eco 6351 Economics for Managers Chapter 11c. Aggregate Supply and Demand

Description:

Eco 6351 Economics for Managers Chapter 11c. Aggregate Supply and Demand Prof. Vera Adamchik Determinants of AD = C+I+G+NX Change in consumer spending (C): Consumer ... – PowerPoint PPT presentation

Number of Views:121
Avg rating:3.0/5.0
Slides: 13
Provided by: slfac
Category:

less

Transcript and Presenter's Notes

Title: Eco 6351 Economics for Managers Chapter 11c. Aggregate Supply and Demand


1
Eco 6351Economics for ManagersChapter 11c.
Aggregate Supply and Demand
  • Prof. Vera Adamchik

2
Determinants of AD CIGNX
  • Change in consumer spending (C)
  • Consumer wealth
  • Consumer expectations
  • Consumer indebtedness
  • Taxes

3
Determinants of AD CIGNX
  • Change in investment spending (I)
  • Real interest rates
  • Expected returns
  • Expected future business conditions
  • Technology
  • Degree of excess capacity
  • Business taxes

4
Determinants of AD CIGNX
  • Change in government spending (G)
  • Change in net export spending (NX)
  • National income abroad
  • Exchange rates

5
Changes in Aggregate Demand
Aggregate Demand Can Increase
Price level
AD2
AD1
Real domestic output, GDP
6
Changes in Aggregate Demand
Aggregate Demand Can Increase
or Decrease
Price level
AD1
AD3
Real domestic output, GDP
7
Shape of the SRAS curve
  • Short-Run Aggregate Supply (SRAS) has three
    segments or ranges
  • Horizontal range (Keynesian segment),
  • Intermediate (Upward-sloping) range,
  • Vertical range (Classical segment)

8
Short-Run Aggregate Supply
P
Vertical range
Price level
Horizontal range
Upward-sloping or intermediate range
Q
Real domestic output, GDP
9
Determinants of SRAS
  • Change in domestic resource availability
  • Change in productivity
  • Change in legal-institutional environment
  • Business taxes and subsidies
  • Government regulation

10
Changes in Short-Run Aggregate Supply
SRAS1
P
SRAS3
SRAS2
Decrease In Aggregate Supply
Price level
Increase In Aggregate Supply
Q
Real domestic output, GDP
11
Macro-equilibrium Real output and the price
level
P
SRAS
Equilibrium in the Intermediate Range
Price Level
Pe
P1
AD
Q
Qe
Q1
Q2
Real Domestic Output, GDP
12
Macro-equilibrium Real output and the price
level
P
SRAS
Equilibrium in the Horizontal Range
Price Level
Pe
AD
Q
Qe
Q1
Q2
Real Domestic Output, GDP
Write a Comment
User Comments (0)
About PowerShow.com