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Aggregate Demand and Supply and Fiscal Policy

Aggregate Demand and Supply and Fiscal Policy. 1. Supply. Aggregate Supply. What is Aggregate Supply?. Aggregate Supply is the amount of goods and services (real GDP) that firms will produce. The supply for everything by all firms.

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Aggregate Demand and Supply and Fiscal Policy

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  1. Aggregate Demand and Supply and Fiscal Policy 1

  2. Supply

  3. Aggregate Supply

  4. What is Aggregate Supply? Aggregate Supply is the amount of goods and services (real GDP) that firms will produce. The supply for everything by all firms. Note: Aggregate Supply differentiates between short run and long-run and has two different curves.

  5. Aggregate Supply Curve AS Price Level AS is the production of all the firms in the economy Real domestic output (GDPR) 5

  6. Shifters Aggregate Supply I. R. A. P.

  7. Shifts in Aggregate Supply An increase or decrease in national production can shift the curve right or left AS2 AS Price Level AS1 Real domestic output (GDPR) 7

  8. Shifters of Aggregate Supply • Change in Inflationary Expectations When prices go up, people want to be paid more. (If people expect lower prices…) 2.Change in Resource Prices (Increase in price of Oil…) (Decrease in price of Chinese steel…) 8

  9. Shifters of Aggregate Supply • Change in Government Regulation (NOT Government Spending) (EPA inspections required to operate a farm…) • Change in Productivity Technology (Computer virus that destroy half the computers…) (The advent of a teleportation machine…) 9

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