宏观经济学CHAP09经济波动导论.pptVIP

* Sometimes it takes students a little while to understand why the LRAS curve is vertical, when the supply curves they learned in their micro principles class were mostly upward-sloping. Here’s an explanation that they might find helpful: “P” on the vertical axis is the economy’s overall price level – the average price of EVERYTHING. A 10% increase in the price level means that, on average, EVERYTHING costs 10% more. Thus, a firm can get 10% more revenue for each unit it sells. But the firm also pays an average of 10% more in wages, prices of intermediate goods, advertising, and so on. Thus, the firm has no incentive to increase output. Another thought: We learn from microeconomics that a firm’s supply depends on the RELATIVE price of its output. If all prices increase by 10%, then each firm’s relative price is the same as before, hence no incentive to alter output. * [The textbook does a fall in AD (Figure 9-8 on p.266); this slide does an increase.] Notice that the results in this graph are exactly as we learned in chapters 3-8: a change in the money supply affects the price level, but not the quantity of output. Here, we are seeing these results on a graph with different variables on the axes (P and Y), but it’s the same model. * The assumption that all prices are fixed in the short run is extreme. Chapter 13 derives the SRAS curve under more realistic assumptions, and Chapter 19 (section 19-2) explores price stickiness in more detail. Yet, the extreme assumption here is worth making. The short-run response of output employment to policies and shocks is the same (qualitatively) whether the SRAS curve is upward-sloping or horizontal. But the horizontal SRAS curve makes the analysis much simpler: a shift in AD leaves P unchanged in the short run. This greatly simplifies analysis in the IS-LM-AD model (chapters 10 and 11). (With an upward-sloping SRAS curve, a shock to the IS and AD curves would change prices in the short run in addit