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PRICE

($4, 30 units). $4. ($3, 45 units). $3. PRICE. ($2, 60 units). $2. ($1, 75 units). $1. D 1. 15. 45. 60. 0. 30. 75. QUANTITY. Decrease in Demand. ($4, 30 units). ($4, 30 units). $4. ($4, 15 units). ($4, 15 units). ($3, 45 units). ($3, 45 units). $3. ($3, 30 units).

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PRICE

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  1. ($4, 30 units) $4 ($3, 45 units) $3 PRICE ($2, 60 units) $2 ($1, 75 units) $1 D1 15 45 60 0 30 75 QUANTITY

  2. Decrease in Demand ($4, 30 units) ($4, 30 units) $4 ($4, 15 units) ($4, 15 units) ($3, 45 units) ($3, 45 units) $3 ($3, 30 units) ($3, 30 units) PRICE ($2, 60 units) ($2, 60 units) $2 ($2, 45 units) ($2, 45 units) ($1, 75 units) ($1, 75 units) $1 ($1, 60 units) ($1, 60 units) D2 D1 15 45 60 0 30 75 QUANTITY

  3. ($4, 30 units) $4 ($3, 45 units) $3 PRICE ($2, 60 units) $2 ($1, 75 units) $1 D1 15 45 60 0 30 75 QUANTITY

  4. Increase in Demand ($4, 15 units) ($4, 15 units) $4 ($4, 30 units) ($4, 30 units) ($3, 30 units) ($3, 30 units) $3 ($3, 45 units) ($3, 45 units) PRICE ($2, 45 units) $2 ($2, 45 units) ($2, 60 units) ($2, 60 units) ($1, 60 units) ($1, 60 units) $1 ($1, 75 units) ($1, 75 units) D1 D2 15 45 60 0 30 75 QUANTITY

  5. $4 $3 PRICE $2 $1 D1 D2 15 45 60 0 30 75 QUANTITY

  6. $4 $3 PRICE $2 $1 D2 D1 15 45 60 0 30 75 QUANTITY

  7. S1 S2 $4 $3 PRICE $2 $1 15 45 60 0 30 75 QUANTITY

  8. S2 S1 $4 $3 PRICE $2 $1 15 45 60 0 30 75 QUANTITY

  9. S1 $4 $3 E1 PRICE $2 $1 D1 15 45 60 0 30 75 QUANTITY

  10. S1 $4 $3 E1 QD=QS PRICE $2 QS QD $1 Decrease in Price SHORTAGE D1 15 45 60 0 30 75 QUANTITY

  11. S1 Increase in Price SURPLUS $4 QD QS $3 E1 QD=QS PRICE $2 $1 D1 15 45 60 0 30 75 QUANTITY

  12. S1 Increase in Price SURPLUS $4 QD QS $3 E1 QD=QS PRICE $2 QS QD $1 Decrease in Price SHORTAGE D1 15 45 60 0 30 75 QUANTITY

  13. S1 E1 PRICE D1 0 QUANTITY

  14. PRICE 0 QUANTITY

  15. AS1 E2 P2 PRICE LEVELS E1 P1 AD2 AD1 0 Q1 fe Q2 REAL GDP

  16. LRAS1 LRAS1 AS1 PL1 AD1 0 fe fe Y1 Y2 REAL GDP

  17. AS1 E1 PL1 PRICE LEVELS AD1 0 fe Y1 REAL GDP

  18. AS1 E1 PL1 PRICE LEVELS AD1 0 fe Y1 REAL GDP

  19. AS1 PL1 E1 PL2 E2 PRICE LEVELS AD1 AD2 0 Y2 Y1 fe REAL GDP

  20. LRAS1 AS1 PL1 E1 PRICE LEVELS AD1 0 fe Y1 REAL GDP

  21. LRAS1 AS2 AS1 PL2 E2 PL1 E1 AD1 0 fe Y2 Y1 REAL GDP

  22. SLF SLF IR2 IR1 DLF 0 Q2 Q1 REAL GDP

  23. LRAS1 AS1 PL1 E1 PRICE LEVELS AD1 0 fe Y1 REAL GDP

  24. AS2 LRAS1 AS1 PL2 E1 PL1 E1 PRICE LEVELS AD1 0 fe Y2 Y1 REAL GDP

  25. LRAS1 AS1 PL1 E1 PL2 E2 AD1 AD2 0 fe Y2 Y1 REAL GDP

  26. SLF IR1 IR2 DLF DLF 0 Q2 Q1 LOANABLE FUNDS

  27. LRAS1 AS1 PRICE LEVELS PL1 E1 AD1 0 Y1 fe REAL GDP

  28. LRAS1 AS1 PL2 E2 E1 PL1 AD2 AD1 0 Y1 Y2 fe REAL GDP

  29. LRAS1 AS1 AS2 PL1 E1 PL2 E2 AD1 0 Y1 Y2 fe REAL GDP

  30. AS1 E1 P1 PRICE LEVELS P2 AD1 E2 AD2 0 fe Q2 Q1 REAL GDP

  31. AS1 Ig is a determinant of AD. If the part changes, so does the whole. (C+Ig+G+X-M) P1 E1 PRICE LEVELS P2 E2 AD1 AD2 0 fe Q2 Q1 REAL GDP

  32. LRAS1 LRAS2 AS is thought to be at Fe in the long-run. So the Long-run AS (LRAS) is vertical. E1 P1 P2 PRICE LEVELS E2 AD1 0 F-e-1 Fe-2 Q2 Q1 REAL GDP

  33. Exchange Rate

  34. MacroLinks: Change in the Axis's New Line on Graph Start with the Action “which causes”

  35. MacroLinks: Change in the Axis's New Line on Graph Start with the Action AD and MD have a DIRECT Relationship “which causes”

  36. MacroLinks: Change in the Axis's New Line on Graph Start with the Action AD and MD have a DIRECT Relationship “which causes”

  37. MacroLinks: Change in the Axis's New Line on Graph Start with the Action “which causes”

  38. $ Value of Current Year Basket CPI Inflation Index = X 100 $ Value of Base Year Basket

  39. Nominal GDP = X 100 Real GDP CPI Index

  40. MacroLinks:

  41. MS1 MS2 IR1 i1 IR2 i2 MD1 0 Q2 Q1 MONEY MARKET

  42. MS1 MS2 IR2 i2 IR1 i1 MD1 0 Q2 Q1 MONEY MARKET

  43. MS1 i2 IR2 IR1 i1 MD2 MD1 0 Q1 MONEY MARKET

  44. MS1 IR1 i1 i2 IR2 MD1 MD2 0 Q1 MONEY MARKET

  45. LRPC1 IR1 A B IR2 SRPC1 SRPC2 0 UR1

  46. A IR1 B IR2 SRPC1 SRPC2 0 UR2 UR1

  47. B IR2 A IR1 SRPC2 SRPC1 0 UR1 UR2

  48. B IR2 A IR1 SRPC1 0 UR2 UR1

  49. A IR1 B IR2 SRPC1 0 UR1 UR2

  50. Each point on the line represent a period in time. Ex: 2009 (CPI, UnRate) e1 represents the “current status” of CPI and the UnRate. e2 represents the “new status”AFTER the Fiscal or Fed Fix. Look at AD/AS graph to see which way it moves. The PHILLIPS Curve Downward Sloping Indicating the TRADE-OFF between keeping prices low and output (AD) high.

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