Concepts
- Shifting AS and AD
- Change in Equilibrium Price Level (Inflation)
- Change in Equilibrium RGDP
- Inverse Relationship Between RGDP and Unemployment
- Employment’s Response to Changes in Unemployment
- Predicting Changes to Inflation, RGDP and Unemployment
- Business Taxes Affect on Both AD and AS
- Double Shifting
Overview
In this lesson, we bring aggregate demand and aggregate supply together to observe how equilibrium occurs in the aggregate model. This equilibrium point will allow us to determine the price level and RGDP that will occur in the economy. Next, we shift AD/AS and observe the changes to the equilibrium price level and RGDP. We revisit the strong inverse relationship between RGDP and unemployment and learn how the level of employment responds to changes in unemployment. In addition, we figure out how to predict changes to inflation, RGDP, and unemployment based on economic fluctuations that could occur in an economy. We conclude our lesson by learning about double shifting. When both AD and AS shift simultaneously, one variable changes in a predictable way, while the other variable’s change is indeterminate.
Materials
Lecture
Video Coming at Later Date
Quiz
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