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Midterm 2 Review Guide
Midterm 2 Review Guide
• Aggregate Demand
o Factors That Shift the Aggregate Demand Curve
• Aggregate Supply
o Long-Run Aggregate Supply Curve
o Short-Run Aggregate Supply Curve
o Price Stickiness and the Short-Run Aggregate Supply Curve
• Shifts in the Aggregate Supply Curves
o Shifts in the Long-Run Aggregate Supply Curve
o Shifts in the Short-Run Aggregate Supply Curve
• Equilibrium in Aggregate Demand and Supply Analysis
o Short-Run Equilibrium
o How the Short-Run Equilibrium Moves to the Long-Run
Equilibrium over Time Self-Correcting Mechanism
• Changes in Equilibrium: Aggregate Demand Shocks
o Application The Volcker Disinflation, 1980–1986
o Application Negative Demand Shocks, 2001–2004
• Changes in Equilibrium: Aggregate Supply (Inflation) Shocks
o Temporary Supply Shocks
§ Application Negative Supply Shocks 1978–1980
o Permanent Supply Shocks and Real Business Cycle Theory
§ Application Positive Supply Shocks, 1995–1999
• Application Negative Supply and Demand Shocks and the 2007–
2009 Financial Crisis