CHAP1.WP(Word5).docVIP

Chapter 8Aggregate Demand, Aggregate Supply, and the Great Depression (Chapter Outline 8-1 Combining Aggregate Demand with Aggregate Supply 8-2 Flexible Prices and the AD Curve a. Effect of Changing Prices on the LM Curve 8-3 Shifting the Aggregate Demand Curve with Monetary and Fiscal Policy a. Effects of a Change in the Nominal Money Supply b. Effects of a Change in Autonomous Spending Global Economic Crisis Focus: The Crisis was a Demand Problem Not Involving Supply Box: Learning About Diagrams: The AD Curve 8-4 Alternative Shapes of the Short-Run Aggregate Supply Curve 8-5 The Short-Run Aggregate Supply (SAS) Curve When the Nominal Wage Rate Is Constant a. What Is Held Constant Along the SAS Curve? Box: Learning About Diagrams: The SAS Curve 8-6 Fiscal and Monetary Expansion in the Short and Long Run a. Initial Short-Run Effect of a Fiscal Expansion b. The Rising Nominal Wage Rate and the Arrival at Long-Run Equilibrium c. The Long-Run Aggregate Supply Curve d. Short-Run and Long-Run Equilibrium e. Interpretations of the Business Cycle 8-7 Classical Macroeconomics: The Quantity Theory of Money and the Self-Correcting Economy a. The Quantity Equation and the Quantity Theory of Money b. Self-Correction in the Aggregate Demand–Supply Model c. Classical View of Unemployment and Output Fluctuations 8-8 The Keynesian Revolution: The Failure of Self-Correction a. Monetary Impotence and the Failure of Self-Correction in Extreme Cases Global Economic Crisis Focus: The Zero Lower Bound as Another Source of Monetary Impotence b. Fiscal Policy and the Real Balance Effect c. Nominal Wage Rigidity 8-9 Case Study: What Caused the Great Depression? a. Dimensions of Great Recession and Great Depression b. Behavior of Output, Unemployment, and Other Variables in the Greta Depression c. Explanation of Weak Aggregate Demand d. Prices and Output Ratio in Greta Depression IP Box: Why Was the Great Depression Worse in the United States than in Europe? Summary (Chapt