Calendar5+-+AS-AD

__Vi__ Lecture Notes:



Handouts:





Aggregate demand (Syllabus Section 2.2)


 * __Homework__ : Read Mankiw (Chapter 33 - Three Facts About Economic Fluctuations, Explaining Economic Fluctuations and The Aggregate-Demand Curve sections). Also, watch the following video.
 * media type="youtube" key="adgqvtlUtMk" height="315" width="560"


 * __Assessments and A__ __ ctivities __ : Lecture on aggregate demand (PDF below)
 * [[file:1 - Aggregate Demand.pdf]]


 * __Related Readings__
 * __[|Investment]__
 * [|The Great Depression]
 * [|Japan's Lost Decade]


 * Short-run aggregate supply and equilibrium (Syllabus Section 2.2)


 * __Homework Due__: Read Mankiw (Chapter 33 - The Aggregate-Supply Curve and Two Causes of Economic Fluctuations sections) and watch the following videos.
 * media type="youtube" key="kdAQhvyco4s" height="315" width="560"
 * __ Khan Academy __
 * [|Stagflation]


 * __Assessments and Activities__: Free-response/problem and lecture


 * __//Free-response/problem//__ : You will work cooperatively with your partner to construct a response to the following prompt.


 * In 1939, with the U.S. economy not yet fully recovered from the Great Depression, President Roosevelt proclaimed that Thanksgiving would fall a week earlier than usual so that the shopping period before Christmas would be longer. Explain what President Roosevelt might have been trying to achieve, using the model of aggregate supply and aggregate demand.


 * __//Lecture//__: Short-run Aggregate Supply and Equilibrium (PDF below)
 * [[file:SRAS and Equilibrium.pdf]]


 * __Related Readings__
 * __[|Disaster and Recovery]__


 * Long-run aggregate supply, economic growth, and economic development (Syllabus Section 2.2)


 * __Homework Due__: Read Mankiw (Chapter 25)


 * __Assessments and Activities__: Free-response/problem and lecture


 * __//Free-response/problem//__: You will work cooperatively with your partner to construct a response to the following prompt.


 * __ For each of the three theories for the upward slope of the short-run aggregate supply curve, explain the following __ :
 * How the economy recovers from a recession and returns to its long-run equilibrium without any policy intervention.
 * What determines the speed of that recovery.


 * __//Lecture//__: Long-run aggregate supply, economic growth, and economic development (PDF below)
 * [[file:3 - LRAS.pdf]]


 * __Related Readings__
 * __[|Investment]__
 * [|Saving]

Short-run inflationary and recessionary gaps and the adjustment to the long-run (Syllabus Section 2.2)


 * __Homework Due__: None


 * __Assessments and Activities__: Free-response and lecture


 * __//Free-response/problem//__: You will work cooperatively with your partner to construct a response to the following prompt.


 * __ Supppose firms become very optimistic about future business conditions and invest heavily in new capital equipment __.


 * 1) Draw an AS-AD diagram to show the short-run effect of this optimism on the economy. Label the new levels of prices and real output. Explain in words why the aggregate quantity of output demanded changes.
 * 2) How might the investment boom affect the long-run aggregate supply curve? Explain.
 * 3) Draw a new diagram to show the new long-run equilibrium of the economy. Explain in words why each of the following changes in the long-run.
 * LRAS
 * SRAS
 * AD


 * __//Lecture//__: Short-run inflationary and recessionary gaps and the adjustment to the long-run (PDF below)
 * [[file:4 - Short-run inflationary and recessionary gaps and long-run adjustment.pdf]]


 * __Related Readings__
 * __[|The Great Depression]__
 * [|Japan's Lost Decade]

Review for test on AS-AD


 * __Homework Due__: Bring all review materials to class.


 * __Assessments and Activities__: Free-response/problem and test review


 * __//Free-response/problem//__: You will work cooperatively with your partner to construct a response to the following prompt.
 * Assume that the economy is experiencing a recession caused by a decrease in aggregate demand. Explain whether and how the economy would adjust in the long-run according to:
 * 1) A neoclassical economist
 * 2) A Keynesian economist

Test on AS model