Econ 101 1st Edition Lectures 14 Demand-Side Equilibrium; Multiplier Analysis / Supply Side equilibrium: Fiscal PolicyChapter 27:Aggregate Supply curve: shows, for each possible price level, the quantity of goods and services that all the nation’s businesses are willing to produce during a specifiedperiod of time, holding all other determinants of aggregate quantity supplied constant.Productivity: is the amount of output produced by a unit of input. Inflationary Gap: is the amount by which equilibrium real GDP exceeds the full-employment level of GDP.Recessionary Gap: is the amount by which the equilibrium level of real GDP falls short of potential GDP.Self-Correcting mechanism: refers to the way money wages react to either a recessionary gap or an inflationary gap. Wage changes shift the aggregate supply curve and therefore change equilibrium GDP and the Equilibrium price level.Stagflation: is inflation that occurs while the economy is growing slowly or having a recession.-Regarding the supply side, why does inflation increase with low economic growth? - Stagflation is a typical result of big shifts in the aggregate supply curve, so supply shocks. The text offers the example of OPEC raising oil prices. This would generally lead to a decline in the demand for oil, but oil was necessary for war, invasion, etc. Also stagflation is common after periods of excessive aggregate demand. (FYI: shift in AS can be from both labor market and supply shocks)Chapter 28:These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.Fiscal Policy: is the government’s plan for spending and taxation. It is designed to steer aggregate demand in some desired direction. Automatic Stabilizer: is a feature of the economy that reduces its sensitivity to shocks, such as sharp increases or decreases in spending. - Are there more examples of stabilizers? One example of an automatic stabilizerwould be Unemployment Insurance provided by the government. While it is bad when someone loses their job, having this Insurance “limits the blow” and allows for the unemployed person to not lose all methods of spendingThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a