EDRD 1400 Chapter Notes - Chapter ch 9: Nominal Rigidity, Aggregate Supply, Aggregate Demand
17 Mar 2017
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Chapter 9 aggregate demand and aggregate supply analysis. To understand what happens during the business cycle, we need an explanation of why real. Gdp, the unemployment rate, and the inflation rate fluctuate: unemployment rate fluctuations mostly caused by fluctuations in real gdp. The aggregate demand and aggregate supply model can be used to explain fluctuations in real. In this model, real gdp and the price level are determined in the short run by the intersection of the aggregate demand curve and aggregate supply curve. Fluctuations in real gdp and the price level are caused by shifts in the aggregate demand curve, the aggregate supply curve, or both. Ad curve shows the relationship between the price level and the quantity of real gdp demanded by households, firms, and the government. The short-run aggregate supply curve (assr) shows the relationship between the price level and the quantity of real gdp supplied by firms in the short run.
