Aggregate Demand and Aggregate Supply :: Economics

Topic 12 blend Demand and nitty-gritty allow for-----------------------------------------------1. Introduction2. Three Key Facts about economic Fluctuations2.1 Fact 1 scotchs Fluctuations are Irregular and Unpredictable2.2 Fact 2 about Macroeconomic Quantities Fluctuate Together2.3 Fact 3 As product Falls, Unemployment Rises3. Explaining Short- hold out Economic Fluctuations3.1 How the Short put across Differs from the Long Run3.2 The prefatorial Model of Economic Fluctuations4. The combine Demand arch4.1 wherefore the Aggregate Demand Curve Slopes Downwards4.2 wherefore the Aggregate Demand Curve whitethorn Shift5. The Aggregate Supply Curve5.1 Why the Aggregate Supply Curve is Vertical in the Long Run5.2 Why the Aggregate Supply Curve May Shift5.3 A overbold Way to Depict Long Run Growth and Inflation5.4 Why the Aggregate Supply Curve Slopes Upward in the Short Run5.5 Why the Short Run Aggregate Supply Curve May Shift6. deuce Causes of Economic Fluctuations6.1 The Effe cts of a Shift in Aggregate Demand6.2 The Effects of a Shift in Aggregate Supply7. Summary2. Three Key Facts about Economic FluctuationsEconomic activity fluctuates from year to year.-----------------------------------------------In most years production of goods and function rises. On average overthe past 50 years, production in the U.S. economy has grown by about 3percent per year. In or so years normal growth does not occur, causinga recession.- A recession is a period of declining genuine GDP, falling incomes, and wage hike unemployment.- A depression is a severe recession.2.1 Fact 1 Economic Fluctuations are Irregular and Unpredictable- Economic fluctuations are irregular and unpredictable.- Fluctuations in the economy are often called the business cycle.2.2 Fact 2 around macroeconomic variables fluctuate together Most macroeconomic variables that measure some type of income or production fluctuate closely together. Although many macroeconomic variables fluctuate to gether, they fluctuate by different amounts.2.3 Fact 3 As output falls, unemployment rises- Changes in real GDP are inversely related to changes in the unemployment rate.- During times of recession, unemployment rises substantially.3. Explaining Short Run Economic Fluctuations- Most economists conceptualize that classical theory describes the world in the long run moreover not in the short run.3.1 How the Short Run Differs from the Long Run- Changes in the money supply affect nominal variables but not real variables in the long run.- The assumption of monetary neutrality is not appropriate when studying year-to-year changes in the economy.3.2 The Basic Model of Economic Fluctuations============================================Two variables are used to develop a model to analyze the short-runfluctuations- The economys output of goods and services measured by real GDP.