Fiscal policy
Published on Dec 03, 2015
No Description
MORE DECKS TO EXPLORE
PRESENTATION OUTLINE
how is canada presently performing?
Photo by wili_hybrid
Untitled Slide
aggregate demand
total demand of a country/society
Total amount of goods and services purchased at each price level. Measured by chain Fisher volume index.
aggregate demand curve
loks similar to market demand curve - price rises, quantity demanded falls
Photo by JD Hancock
aggregate demand at each price level
equivalent to gdp that would occur at that price level (sum of consumption)
for economic growth
real gdp must grow - aggregate quantity demanded must increase at each price lvl
Photo by Sergiu Bacioiu
something has to increase in our formula
aggregate supply curve
total amount of goods/services supplied at each price level
Photo by stevendepolo
higher levels of output
prices tend to rise much more rapidly
prices go through the roof
firms charge whatever they want-perfect inelasticity (vertical)
this is a point on the production possibility curve
we need more tech/breakthrough discovery to fix it
Photo by arbyreed
intersection point
prices start to rise more rapidly, but curve isn't yet vertical
Photo by Steven Vance
Competition for scarce resources starts to push price levels up. The economy still has room for further increases in real GDP (frictional unemployment).
However, the curve eventually becomes vertical as an absolute capacity is reached.
full employment equilibrium
point at whice price levels start to rise more quickly, but before absolute capacity
Photo by Northern Ireland Executive
when ad is to the left of as (recessionary gap)
gdp is lower-price levels rising very slowly
Photo by wockerjabby
Recessionary gap
- High unemployment
- Low inflation
- Low GDP growth
when ad curve intersects to the right of as (inflationary gap)
gdp high, so are employment levels
inflationary gap
- High inflation
- High employment
- High levels of GDP growth
