15. Real GDP Growth Rate
Inflation
Rate
π
LRAS
Shift Left - Losing Capitals
Bad weather
Higher oil price
Tech slump
Higher business taxes or regulations
War, Earthquake, Pandemic
Shift Right - Gaining Capitals
Good weather
Lower Oil Price
Tech boom
Lower business taxes or regulation
Smooth production
16. Quiz
If %∆M (Money)is growing at 6% and %∆V
(Velocity) is growing at 6%, create a graph to
show the aggregate demand curve for the
growth rate for %∆P (inflation) and %∆Y
(GDP).
17. Quiz
If %∆M (Money)is growing at 6% and %∆V
(Velocity) is growing at 6%, create a graph to
show the aggregate demand curve for the
growth rate for %∆P (inflation) and %∆Y
(GDP).
18. 0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Real GDP Growth Rate %
Inflation
Rate
%
Total Spending Rate = Inflation Rate + Real GDP
Growth Rate
12% Increase in
Total Spending?
Inflation Rate +
Real GDP
= 12%
If inflation was
3%, what was
GDP growth?
