宏观经济学英文版第七章.ppt

Aggregate Supply The aggregate supply relation captures the effects of output on the price level. It is derived from the behavior of wages and prices. Recall the equations for wage and price determination from chapter 6: Aggregate Supply Step 1: Eliminate the nominal wage W from: Aggregate Supply Step 2: Express the unemployment rate in terms of output: Aggregate Supply Step 3: Replace the unemployment rate in the equation obtained in step one: Aggregate Supply The AS (aggregate supply) relation (better name would be “the labor market relation “)has two important properties: a. An increase in output leads to an increase in the price level. This is the result of four steps: Aggregate Supply Aggregate Supply Aggregate Supply Aggregate Supply An increase in the expected price level shifts the aggregate supply curve up. Aggregate Supply Let’s summarize: Starting from wage determination and price determination in the labor market, we have derived the aggregate supply relation. This means that for a given expected price level, the price level is an increasing function of the level of output. It is represented by an upward-sloping curve, called the aggregate supply curve. Increases in the expected price level shift the aggregate supply curve up; decreases in the expected price level shift the aggregate supply curve down. Aggregate Demand The aggregate demand relation captures the effect of the price level on output (through the real money stock). It is derived from the equilibrium conditions in the goods and financial markets. Recall the equilibrium conditions for the goods and financial markets described in chapter 5: The changes in the real money stock can either come from changes in nominal money supply ,M, or changes in the price level. Using the IS and the LM relations, we can derive the relation between the price level and the level of output implied by equilibrium in the goods and financial markets . Aggregate Demand Aggregate Demand Changes in