module 45- putting it all together

factors that shift the long-run aggregate supply curve

• labor productivity number of workers

• expansionary policy

• raising or lowering taxes or govt. spending

• contractionary policy

starting point

• analyze any situation, you have to know where to start

• change in the economy

• short-run effects

• secondary effects

pivotal event

• initial short-run effects

• secondary effects

• change in the economy or a policy response to the initial reaction

• analyze the situation

policy used to combat a recession

• Long run philips curve

• contractionary policy

• Real GDP

• expansionary policy

policy used to combat inflationary measures

• labor productivity

• contractionary policy

• stimulus

• expansionary policy

in the long run, what does monetary policy affect?

• aggregate demand

• supply curve

• GDP

• the aggregate price level (not real GDP)

in the long run, aggregate price level and nominal values will be affected by the same proportion. what about real values?

• real values unchanged due to the neutrality of money

• real values increase because aggregate demand

• real values decrease due to neutrality of money

• real values increase because of inflation

a price level decrease will encourage ____ and discourage___, causing an appreciation in the domestic currency on the foreign exchange market

expansionary policy shifts aggregate demand to the _____ and contractionary policy shifts aggregate demand to the ______

how does the govt. implement expansionary or contractionary fiscal policy?

• by lowering inflation

• by raising or lowering taxes or govt. spending

• by supplying the working class with aid

• signing tarrif deals