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Classical and Keynesian Demand and Supply
Classical and Keynesian Demand and Supply
Classical and Keynesian Demand and Supply
Nature of Curves and Shifts Fixed vs Flexible Prices Determinant factors Click to edit Master subtitle style Consumption theories Investment theories Role of Money, Money Illusion, Liquidity Trap Crowding Out, Trade Offs Policy Implications
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11/1/12
LR AS
1 9 9 0
LR AS
20 00
1. In the long run, technologica l progress shifts long-run aggregate supply . . . Aggregat e Demand A , D A D A D 0 Y 19
80 19 90
P 19
90 20 00
P 19
80
Y 19
90
1 9 8 0
Y 20
00
Quantity of Outp ut
Copyright 2004 South-
Short-run aggregate supply, A S A S 2 3. . . . but over the shorttime, run aggregatesupply curve shifts . . . 1. A decrease in aggregate demand . . . Aggregate demand, A D Quantity of Outp ut
Copyright 2004 South-
P P 2 P 3 B
Y 2
Effect
The Price Level and Net Exports: The Exchange-Rate
Effect
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Sustained Growth
Inflation AS AS1
Sustained growth (not to be confused with sustainable economic growth) occurs when AS and AD rise at similar rates national income can rise without effects on inflation
2.0%
AD2 AD Y1 Y2
10
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Business Cycles
Four Phases Causes:
changes in capital expenditures inventory adjustments Innovation and imitation credit and loan policies of commercial banking. external shocks
Climate and natural factors Monetary Theory Overinvestment Theory Multiplier Accelerator Theory
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