Chapter 6 Aggregate Supply Aggregate Demand and Price Adjustment 且经济学院1
1 Chapter 6 Aggregate Supply、 Aggregate Demand and Price Adjustment 0 10 20 30 40 90 91 92 93 94 95 96 97 98 99 00
Topics to be Discusses o Aggregate Demand(AD) Function o Aggregate Supply (AS) Function ⊙ AS-AD Model o Price Changes and determination of Output o Price Adjustment Process 友学经济学院
Topics to be Discusses Aggregate Demand (AD) Function Aggregate Supply（AS）Function AS-AD Model Price Changes and Determination of Output Price Adjustment Process
6.1 AD Function o Aggregate Demand: the gross demand for production and service under a given price level O AD Function: the relationship between aggregate and price level, or the quantitative relations between general price level and social equilibrium expenditure AD=C+I+G+N 友学经济学院
Aggregate Demand：the gross demand for production and service under a given price level. AD Function：the relationship between aggregate and price level，or the quantitative relations between general price level and social equilibrium expenditure. AD =C + I +G + NX 6.1 AD Function
6.1 AD Function AE AEo ⊙ AD Curve 0 0 AEl From the angle of aggregate expenditure: Price is Po, Y Aggregate expenditure is AEo 章 Price is f Aggregate expenditure is AE1 一十一 AD Y1 复具学济器院
6.1 AD Function AD Curve ❖ From the angle of aggregate expenditure： Price is P0， Aggregate expenditure is AE0 Price is P1， Aggregate expenditure is AE1 AE E’0 Y Y 0 AE0 AE1 Y0 Y P P0 Y1 Y1 AD P1 E0 E1 O E’1 O
6. 1 AD Function o Why is the AD Curve downward sloping? nterest Effect:P个→Md个→R个→→ AE and y↓ Real Income effect:P↑→Weah→Cand|→AE and Y Taxation Effect:P↑→Wage↑→T个→Yd→Cand|↓ → AE and y↓ Import-and-export:P↑→X,M↑→1→ AE and y↓ 友学经济学院
Why is the AD Curve downward sloping? ❖ Interest Effect: P Md R I AE and Y ❖ Real Income Effect: P Wealth C and I AE and Y ❖ Taxation Effect: P Wage T Yd C and I AE and Y ❖ Import-and-export: P X ,M I AE and Y 6.1 AD Function