Chapter 2. The AS-AD Model
2.1 Section Title
Macro Models
Quiz
30
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The AS-AD Model and the Phillips Curve
Question The AS-AD Model and the Phillips Curve
kNJ78moPb/RVaCKG2gUmx6jF/wPJgEF9rGNZUKtGJ4SbxxvXSM/PuKiR59tVJLi8tddrPJpyoDtmjqNWWHUGeWI3q87eSbuHi5wjKBp1QL45kHm0lG/NKbm3hF7F49kk1fyEcfQG1LFPV3YS+Ud+7W/nFMhnNaW1fAHWdytILd35ymNrYKXO/ZPe5JsCPGiIIkcLV12ay6wKTLh2scgv9dMGVjjZnEFxBQiNOuP93HvvV2ISbKNum44RyWjrGJOXJPrCdA1Yy1DlGsJhrtgzcIwJ95RzZUw7wmwpvtG+yOSVsVx6GWR7r+PcwBM=If households consume a greater portion of their income then this will boost spending and nominal GDP. An increase in consumption spending will shift the AD curve. The AS curve shifts when firms decide to change the price they charge for goods and services in response to changes in input costs or expectations of inflation.
Question The AS-AD Model and the Phillips Curve
92unXUj6aKuvZSOcZBB06le7ZO8b/ZibtqnVSbaH76Jwd8zlNvncuriJcRFDfo1W/UtfEM3aG2PxHR7DqN3IOGSiplYvS0KMYnRzqiGKyhmXbP3H6Ap1vuBtsXRFQwKnBa5GXDlxt4BdTIoUff9lOsSTQqMRaaHZc2EitFG0aPAbIMD98d6t7mbBq3Y1EdVh3vSVfNzfKDdUUlnI7p8YbP7s9tlm6mRRG87vzBs1Xm1iEcHoH5dRJJ47gku5vqSJoDASf5tfKfs45VC0HZKJBd77hoIc/kB/ZpPaL6VosaO3jF1zFFZ7t3darWI=An increase in the growth rate of nominal GDP results from an increase in spending. The increase in spending will increase real GDP and at the same time some firms will increase prices, leading to higher inflation. The increase in production will reduce unemployment.
Question The AS-AD Model and the Phillips Curve
MpfWg2k80ui7mMS9bsjOFej3ez4qQr/2ozZpdeJfHhu/yRiJFAH1JOBYoxgGvi8USN3SHQvMBAkZUdL3BPXAiX0+QCXdRUC/MAYwV9TVFkhuvzEVgvNT/6X7msDUizPCN1XPAWRkP0dZ+PLBTLMefDrE4ZvcpQzCnJz3LcJ/K0Ryo0pVmQqJTTtWxLBgIBNZHZ+bhLgEVMccnwZuAsw9o1fcUDLq6nLz5ni+mCeSnJBS/LWkoY84v5ohe9BppU/9tNtmWHXadpQ=A negative supply shock will shift the AS curve up and to the left. This will reduce output and cause the inflation rate to rise.
Question The AS-AD Model and the Phillips Curve
g2qimCuh45zu9NBxXF+SW/GrKNiVZc4rFDwqGlqw8mGCmLe9G4gxTG++vU6IO+zdalLYvCBowHwxkV5IwUkgR34E5Pl0tBw+vHbRI0bK2G9FiZsubDvAU3i3zldYQGSqPbBbRpVdB4seJ9idmna/tL1nSkd7LV+jQLImnkST+db473t6egVSrztB5mb63ZT9NoZZvIhinQkUzv3zU0gyEmXqYuImX8zlnWGQqPSs73cbY4xn3cuZcDyKjMHst0PBTbFroWdE7bPrBqVaAn increase in the growth rate of nominal GDP results from an increase in spending. The increase in spending will shift the AD curve. The AS curve shifts when firms decide to change the price they charge for goods and services in response to changes in input costs or expectations of inflation.