Chap009 4 (2010)

Aggregate Demand ,[object Object],[object Object],[object Object],[object Object]

Macro Equilibrium ,[object Object],[object Object]

The Desired Adjustment ,[object Object],[object Object],[object Object]

Escaping a Recession AS (Aggregate supply) AD 1 E 1 AD 2 Q F REAL OUTPUT PRICE LEVEL Q E P E

Components of Aggregate Demand ,[object Object],[object Object],[object Object],[object Object],[object Object]

Consumption ,[object Object],[object Object]

Income and Consumption ,[object Object],[object Object]

U.S. Consumption and Income DISPOSABLE INCOME (billions of dollars per year) $1000 2000 3000 4000 6000 5000 4000 3000 2000 1000 0 5000 6000 7000 $7000 CONSUMPTION (billions of dollars per year) Actual consumer spending 45° 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 1999 2000 C = Y D

Consumption vs. Saving ,[object Object],[object Object]

Consumption vs. Saving ,[object Object],[object Object],[object Object]

Consumption vs. Saving ,[object Object]

MPC and MPS MPS = 0.20 MPC = 0.80

The Consumption Function ,[object Object],[object Object],[object Object],[object Object]

Autonomous Consumption ,[object Object],[object Object],[object Object],[object Object],[object Object]

Income-Dependent Consumption ,[object Object],income -dependent consumption autonomous consumption Total consumption  

[object Object],Income-Dependent Consumption

Income-Dependent Consumption ,[object Object],[object Object],[object Object]

One Consumer’s Behavior ,[object Object],[object Object],[object Object]

The 45-Degree Line ,[object Object],[object Object],[object Object]

A Consumption Function $400 $50 100 150 200 250 300 350 400 450 C = Y D Saving Dissaving Consumption Function C = $50 + 0.75Y D $125 A C D E B G

The Aggregate Consumption Function ,[object Object],[object Object]

Shifts of the Consumption Function ,[object Object],[object Object],[object Object]

Shift in the Consumption Function Decreased confidence a 1 C = a 1 + bY D C = a 2 + bY D a 2 CONSUMPTION ( C ) DISPOSABLE INCOME 0

Shifts of Aggregate Demand ,[object Object],[object Object],[object Object]

AD Effects of Consumption Shifts Y 0 Q 2 Q 1 P 1 f 2 f 1 C 1 AD 1 Shift = f 1 – f 2 Expenditure Income C 2 Price Level Real Output AD 2

AD Shift Factors ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Shifts and Cycles ,[object Object],[object Object],LO2

Government Spending ,[object Object],[object Object]

Net Exports ,[object Object],[object Object],[object Object]

The AD Curve Revisited ,[object Object],[object Object]

Building an AD Curve Q G Q I Q X-M C I G X-M d Q C Q 0 P 0 AD Price Level Real GDP

Macro Failure ,[object Object],[object Object],[object Object]

Undesired Equilibrium ,[object Object],[object Object]

Recessionary GDP Gap ,[object Object],[object Object],[object Object]

Recessionary GDP Gap ,[object Object],[object Object]

Macro Failures Macro Success: (perfect AD) PRICE LEVEL REAL GDP AD 1 AS P* E 1 Q F

Macro Failures Cyclical Unemployment: (too little AD) recessionary GDP gap PRICE LEVEL REAL GDP AS P* E 1 Q F AD 2 E 2 Q 2 P 2 Q E2

Inflationary GDP Gap ,[object Object],[object Object]

Macro Failures Demand-pull inflation: (too much AD) inflationary GDP gap PRICE LEVEL AS P* E 1 Q F AD 3 E 3 P 3 Q 3 Q E3

Unstable Equilibrium ,[object Object],[object Object],[object Object]

Macro Failures ,[object Object]

Self-Adjustment? ,[object Object],[object Object],[object Object]

The Leading Economic Indicators ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Chap009 4 (2010)

Recommended

Recommended

More Related Content

Featured

Featured (20)

Chap009 4 (2010)