Chapter 19 Aggregate Demand and Aggregate Supply Three key facts about economic fluctuations Explaining Short-Run Economic Fluctuations The Aggregate-Demand Curve The Aggregate-Supply Curve Two causes of economic fluctuations
Three Key Facts About Economic Fluctuations
Explaining short-run economic fluctuations
1. The economy’s output of goods and services, measured by real GDP
2. The overall price level, measured by the CPI or GDP Deflator
1. Pigou’s Wealth Effect
2. Keynes’ Interest Rate Effect
1. Changes in spending plans by consumers or firms.
2. Changes in fiscal or monetary policy.
Why the AS curve is vertical in the long run
Why the long-run AS curve might shift
A new way to depict long-run growth and inflation
Why the short-run AS curve might shift
The long-run equilibrium: See Figure 19-7