Interest rate effect - PowerPoint PPT Presentation

Not to scare you…..but……

Not to scare you…..but……. LRAS. SRAS1. Price Level. SRAS. AD1. AD. Yf. GDP, Income, Employment. Aggregate Demand and Aggregate Supply Model (AD/AS). Ch. 31: Aggregate Demand and Aggregate Supply. What causes short run fluctuations?

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EB222 Macroeconomics Fall 2012 Review Slides Instructor: Shan A. Garib

EB222 Macroeconomics Fall 2012 Review Slides Instructor: Shan A. Garib. Please review the following slides in ADDITION to quizzes 1-5. The Short-Run Aggregate Supply Curve. Positive Slope SRAS because of Prices ALL Prices increase &gt; suppliers costs in wages are sticky so real wages fall

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317 views • 19 slides

Chapter 7

Chapter 7. Short Run Aggregate Demand and Aggregate Supply. Aggregate Demand. Effects Real Balance Effect - Price falls, increases purchasing power, we buy more Interest rate Effect - As price falls, interest rates fall, we borrow and spend more

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