Tuesday, March 4, 2014

Aggregate Supply & Aggregate Demand



Recessionary Gap
-A recessionary gap exists when equilibrium occurs below full employment output


Inflationary Gap
-An inflationary gap exists when equilibrium occurs beyond full employment output



Classical

-Competition is good
-Believes in the invisible hand
-In the LR the economy will balance at FE
-Trickle Down Effect - Help the rich first and everybody else second


Keynesian

-Competition is flawed
-In LR, we are all dead


LRAS (Long Run Aggregate Supply)
-Deals with potential output

LRAS Shifts

-Technology
-Capital Resources
-Growth
-Entrepreneurship
-Resources Available
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2 comments:

  1. Chimuanya A.March 4, 2014 at 8:15 PM

    Love the background and examples can be used for the graphs.

    ReplyDelete
  2. HanhCMarch 5, 2014 at 4:34 AM

    The note is neatly done but for Aggregate Demand and Aggregate Supply topic, these two have a lot of information need to be include. The note is very well done but it is too short to actually cover the topic. For Classical and Keynesian, you should make the chart so we know what else is include under each topic.

    I hope my comment help.

    ReplyDelete

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