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MIT
14 02 -
Aggregate Supply and Aggregate Demand
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Massachusetts Institute of Technology
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Lecture 13: Aggregate Supply and Aggregate Demand • Aggregate supply• Aggregate Demand•ShocksP = 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 - Aggregate SupplyYPADASAD-AS: Canonical ShocksYPADASMonetary expansion; fiscal expansion; oil shock (figs
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