EC140 Chapter Notes - Chapter 23: Aggregate Demand, Aggregate Supply, Chage And Aska
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EC140 Full Course Notes
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Chapter 23: output and prices in the short run. Ae curve shifts in response to change in price level i(cid:374) all e(cid:272)o(cid:374)o(cid:373)(cid:455)"s p(cid:396)i(cid:272)es: change affects desired consumption expenditure and desired net exports. Relationship b/w price level & desired cons. how changes in price level leads to changes in household wealth = changes in desired spending. Private se(cid:272)to(cid:396)"s (cid:449)ealth = (cid:373)ostl(cid:455) held i(cid:374) fo(cid:396)(cid:373) of assets (cid:449)/fi(cid:454)ed (cid:374)o(cid:373)i(cid:374)al (cid:448)alue: e. g. money. @ same time, consumers in other countries reduce purchases of now relatively more expensive canadian-made goods changes cause downward shift i(cid:374) nx f"(cid:374) Deriving ad curve: given value of price level, p0, equilibrium gdp = point where ae0 crosses 45 degree line. As price level rises to p1, the ae curve shifts down to ae1 and equilibrium level of gdp falls to y1: determines second point on ad curve, e1.