Documentos de Académico
Documentos de Profesional
Documentos de Cultura
PRODUCTION POSSIBILITIES
Q 14 Robots (thousands)
13 12 11 10 9 8 7 6 5 4 3 2 1
Unattainable
A B C D W
4 5 6 7 Pizzas (thousands)
AS
Price Level
AD
Y
AS/AD: Recession
Long Run Aggregate Supply (Full Employment)
ASLR
AS
Price Level
AD
Y
ASLR
AS
Price Level
AD
Y f
Y 1
Price Level
P2
P1
Yf
Y1
Price Level
P2
P1
AD1
Y2 Y1
Shift the Supply curve (always vertical) when FED changes the money supply to change nominal interest rates!
If Nominal GDP Increases, Transactions Demand increases, and Dm Curve Shifts to the right. If Asset Demand for money increases, Dm Curve shifts to right
Dm
Quantity of Money
Sm3
10 8
Graph
rate of interest, i 10 8 6
6
0
0
Qty. of Money
Dm
AS
ID
Amount of investment, I
P3 P2 P1
AD3(I=$25) AD2(I=$20) AD1(I=$15)
If the Money Supply Increases to Stimulate the Economy Interest Rate Decreases Investment Increases AD & GDP Increases with slight inflation Increasing money supply continues the growth but, watch Price Level.
Price level
D
Q
Quantity of Loanable Funds
Redelsheimers Graphs to Know AP Macro Review Copyright 2005
What changes Supply: 1. Increase in Household savings 2. Increase in Govt savings 3. Increase in Business savings 4. Increase in Business savings 5. Increase in Foreigners savings
What changes Demand: 1. Increase in Household borrowing 2. Increase in business Investment 3. Increase in Foreign borrowing 4. Increase in Government borrowing (When the govt has a budget deficit!) = (the crowding -out effect)
Dy 0
Qe Quantity of Yen
Redelsheimers Graphs to Know AP Macro Review Copyright 2005
Dy
Quantity of Yen
Redelsheimers Graphs to Know AP Macro Review Copyright 2005
6 5
As inflation declines...
4
3 2 1 0 1 2 3
unemployment increases
And vice versa!
SRPC
6 5 4 3
2
1 0 1 2 3 4 5 6 7
SRPC 1
SRPC 2
Phillips Curve
Short run trade-off between inflation and unemployment. In the Long Run there is no trade off. The long run Phillips curve is Vertical! Stagflation (an increase in Unemployment and inflation) or an Aggregate Supply Shock will shift the SRPC to the right. Decreases in Inflation and Unemployment will shift the SRPC to the left. (and increase in AS would cause this)
Redelsheimers Graphs to Know AP Macro Review Copyright 2005
ASLR1 ASLR2
A Capital Goods Price Level B Consumer Goods Q1 Q2 Real GDP Redelsheimers Graphs to Know AP Macro Review Copyright 2005 D
$ INCOMES
RESOURCES
INPUTS
BUSINESSES
GOVERNMENT
HOUSEHOLDS
$ REVENUE
$ CONSUMPTION
Redelsheimers Graphs to Know AP Macro Review Copyright 2005