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Real GDP and the price level in the long run.
Member rating: No Rating | Words: | Submitted: Mon Dec 22 2003
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CHAPTER 10 REAL GDP AND THE PRICE LEVEL IN THE LONG RUN CHAPTER OVERVIEW This chapter introduces the concepts of aggregate demand (AD) and long-run aggregate supply (LRAS). It shows how economic growth can be illustrated by the use of the LRAS. Both LRAS and AD are used extensively in later chapters. An aggregate demand and long-run aggregate supply curves are derived. They are used to identify the long-run equilibrium price level and equilibrium real GDP. Why each curve shifts is then discussed, and the effect of these shifts on macroeconomic equilibrium is shown. Finally the model is used to explain both inflation and deflation. CHAPTER OBJECTIVES After studying this chapter students should be able to 1. Understand the concept of long-run aggregate supply. 2. Describe the effect on economic growth on the long-run aggregate supply curve. 3. Explain why the aggregate demand curve slopes downward and list key factors that cause this curve to shift.. 4. Discuss...
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