Karteikarten
CH.6
Karten in diesem Stapel (1)
- 1*Aggregate Demand (AD) >the total quantity of Output that all market participants are willing and able to buy at alternative price levels in a given period of time -Downward Explanation >Real balances effect: the real value of money is measured by the purchasing power, that is, how many goods and services each monetary unit will buy ̧ >Foreign trade effect: when national products become cheaper, national consumers as well as foreigners will buy more national products and less imports ̧ >Interest rate effect: at lower price levels, the amount of money people need to borrow is smaller. As demand for loans diminishes, interest rate tend to decline and the cheaper money stimulates more borrowing purchases -Calculate AD C > consumption (families) I > investmen (companies) G > government spending X - M > Exports - Imports( net exports) AD = C + I + G + ( X - M )*Aggregate Supply
> is the total quantity of Output that producers are willing and able to sell at alternative price levels in a given period time
(CETERIS PARIBUS)
-Upward Slope Explanation:
>Profit margins:
many costs are relatively constant in the short run, therefore higher prices for goods and services tend to widen profit margins
̧
>Costs of production:
higher prices are required to recover higher cost that goes with an increase in the output rate
*Market Equilibrium
> represents the combination of price level and real Output that is compatible with buyers and seller' intentions
-Macro Failure: 2 potential problems
1. Undesirability
> may occur with inflation and unemployment
> Inflation: when equilibrium price above 3%
> Unemployment: equilibrium quantity are below the full employment
2. Instability:
>the macro equilibrium change due to changes in the AD / AS curves
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- ECONOMICS (CH.6 AGGREGATE SUPPLY / DEMAND MODEL) Karteikarten am CH.6, erstellt von Jose Velasco Nieto am 19/02/2019.
- Erstellt von
- Jose Velasco Nieto
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