ECON 1051 1nd Edition Lecture 57 Outline of Last Lecture I. Changes in the Expectations of Households and FirmsII. Changes in Foreign Variables III. The Long-Run Aggregate Supply Curve IV. The Short-Run Aggregate Supply Curve Outline of Current Lecture I. Short-Run Aggregate Supply CurveII. Macroeconomic Equilibrium In the Long-Run and Short-Run Current LectureI. Short-Run Aggregate Supply Curvea. Shifts of the Short-Run Aggregate Supply Curve versus Movements Along iti. The short-run aggregate supply curve tells us the short-run relationship between the price level and the quantity of goods and services firms are willing to supply, holding constant all other variables that affect the willingness of firms to supply goods and servicesii. If the price level changes but other variables are unchanged, the economywill move up or down a stationary aggregate supply curve; if any variable other than the price level changes, the aggregate supply curve will shift b. Variables that shift the short-run aggregate supply curvei. Increases in the Labor Force and in the Capital Stock 1. As the labor force and the capital stock grow, firms will supply more output at every price level and the short-run aggregate supply curve will shift to the rightii. Technological Change1. As positive technological change takes place, the productivity of workers and machinery increases, which reduces firms’ costs of production and allows them to produce more output at every price level, shifting the short-run aggregate supply curve to the rightc. Expected Changes in the Future Price Level 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.i. If workers and firms expect the price level to increase b a certain percentage, the SRAS curve will shift to by an equivalent amount, holding constant all other variables that affect the SRAS curved. Unexpected Changes in the Price of an Important Natural Resource i. Supply Shock1. An unexpected event that causes the short-run aggregate supply curve to shift II. Macroeconomic Equilibrium In the Long-Run and Short-Run a. Case 1 i. Stock Market Crashes ii. Households of firms decrease C and I iii. AD shifts left iv. Equilibrium of
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