Transcript Macro_Module_18

Module 18
Aggregate Supply:
Introduction and
Determinants
KRUGMAN'S
MACROECONOMICS for AP*
Margaret Ray and David Anderson
What you will learn
in this Module:
• 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
Aggregate Supply
• The relationship between
the price level and the real
GDP supplied
•In the short run, there is a
positive slope to the SRAS
curve.
•In the long run, the LRAS
curve is vertical at the level
of potential GDP.
The Short-Run Aggregate
Supply Curve
• Profit per unit of output
• Nominal Wage
• Sticky Wages
• SRAS
Shifts of the Short-Run
Aggregate Supply Curve
• ∆ Commodity Prices
• ∆ Nominal Wages
• ∆ Productivity
The Long-Run Aggregate
Supply Curve
• Flexible Wages
• Long Run
• LRAS
• Potential Output
• Factors that shift
LRAS
From the Short Run to the Long
Run
Long Run – all
inputs become
variable
Table 18.1 Factors that Shift the Short-Run Aggregate Supply
Curve
Ray and Anderson: Krugman’s Macroeconomics for AP, First
Edition
Figure 18.2 Shifts of the Short-Run Aggregate Supply Curve
Ray and Anderson: Krugman’s Macroeconomics for AP, First
Edition
Copyright © 2011 by Worth Publishers
Figure 18.5 From the Short Run to the Long Run
Ray and Anderson: Krugman’s Macroeconomics for AP, First
Edition
Copyright © 2011 by Worth Publishers
Figure 18.1 The Short-Run Aggregate Supply Curve
Ray and Anderson: Krugman’s Macroeconomics for AP, First Edition
Copyright © 2011 by Worth Publishers
Figure 18.3 The Long-Run Aggregate Supply Curve
Ray and Anderson: Krugman’s Macroeconomics for AP, First Edition
Copyright © 2011 by Worth Publishers
Figure 18.4 Actual and Potential Output from 1989 to 2009
Ray and Anderson: Krugman’s Macroeconomics for AP, First
Edition
Copyright © 2011 by Worth Publishers
Unnumbered Figure 18.1 Prices and Output During the Great Depression
Ray and Anderson: Krugman’s Macroeconomics for AP, First Edition
Copyright © 2011 by Worth Publishers