Lecture 19: Aggregate Supplyand Aggregate Demand• Current events (Bloomberg 11/15/99)•Review– Aggregate supply– Aggregate demandAggregate Supply W = P F(1-Y/L,z) P = (1+ µ) W => P = P (1+ µ) F(1-Y/L,z)eeP = P (1+ µ) F(1-Y/L,z)YPASPYeneP (t) = P(t-1) [for now] =>eAS: P(t) = P(t-1) (1+ µ) F(1-Y(t)/L,z)Aggregate DemandIS: Y = C(Y-T) + I(Y,I) + GLM: M = Y L(i) PYiLMLM’ [ P’ > P]AD: Y = Y(M/P, G, T) + + -YPADAggregate Demand - AggregateSupplyYPADASAD-AS: Canonical ShocksYPADASMonetary expansion; fiscal expansion; oil
View Full Document