01 Giới thiệu về lập trình Python và các công cụ lập trình ntdat qnuslide MACROECONOMICS Lecturer MSc Nguyen Thi Thuy Dung Chapter 3 Aggregate Supply – Aggregate Demand • Definition of AD • Factors af[.]
MACROECONOMICS Lecturer: MSc Nguyen Thi Thuy Dung Chapter 3: Aggregate Supply – Aggregate Demand • Definition of AD • Factors affecting AD • Definition of AS • Factors affecting AS • Applying AD – AS model • Short-run fluctuations in macroeconomic The Aggregate-demand curve (AD) The aggregate-demand curve shows the market value of the domestically-produced final goods and services that buyers—households, firms, the government, and foreigners—want to buy at each price level Recap: GDP = Total Expenditure • The aggregate demand is the quantity of goods and services people want to buy at any given level of prices • We saw earlier that GDP is the actual total expenditure on final goods and services made within a country in a given period of time • Therefore, GDP = actual consumption spending + actual investment spending + actual government spending + actual exports – actual imports Aggregate Demand = Desired Total Expenditure • Now, aggregate demand is the desired total expenditure on final goods and services made within a country in a given period of time • Demand side of the economy will be the expenditure side of the economy! • So, aggregate demand = desired total expenditure = desired consumption spending (C) + desired investment spending (I) + desired government spending (G) + desired exports – desired imports (NX) Why the Aggregate-Demand Curve Slopes Downward? AD = C + I + G + NX • In chapter 2, C, I, G, and NX as the actual amounts of consumption, investment, government purchases, and net exports • Now, we interpret C, I, G, and NX as the desired amounts of consumption, investment, government purchases, and net exports • Aggregate demand (AD) is the relationship between the total spending in an economy on domestic goods and services and the price level for output Figure The Aggregate-Demand (AD) Curve is downward sloping The AD curve shows the total spending on domestic goods and services at each price level Q: Why is the AD curve downward sloping? To simplify, if all prices fall, why would the demands for all goods and services increase? P P P2 A decrease in the price level Aggregate Demand (AD) C + I + G + NX Y Y2 increases the quantity of goods and services demanded Quantity of Output (Y) Why the Aggregate-Demand Curve Slopes Downward? • How changes in the price level affect the different components of aggregate demand? • The Wealth Effect: a lower price level boosts consumption spending by households (C) • The Interest-Rate Effect: a lower price level boosts investment spending by businesses (I) • The Exchange-Rate Effect: a lower price level boosts net exports (NX) • Most of the variables (C, I, & NX) are determined by the price level; government purchases (G) is determined by the decisions of policymakers, independent of the price level The Price Level and Consumer: The Wealth Effect • While income affects household consumption the most, but wealth does as well • Some household wealth is held in nominal assets, so as price levels rise (P↑), the real value of household wealth declines This results in less consumption (C↓) (Example: Price of oranges goes up; you cannot buy as many oranges as before assuming your wealth has not changed.) • Implication: higher price level leads to lower consumption -> decreasing AD(C + I + G + NX ↓) The Price Level and Investment: The Interest-Rate Effect • When all prices fall, people need less cash for shopping needs -> They lend the unneeded cash • The increased availability of loans reduces the interest rate • A lower interest rate encourages investment spending by businesses (I↑) greater • Implication: Lower price -> Higher in investment spending (I↑) -> raises AD (C + I + G + NX↑) .. .Chapter 3: Aggregate Supply – Aggregate Demand • Definition of AD • Factors affecting AD • Definition... – desired imports (NX) Why the Aggregate-Demand Curve Slopes Downward? AD = C + I + G + NX • In chapter 2, C, I, G, and NX as the actual amounts of consumption, investment, government purchases,