Tuesday, April 5, 2011
Extending the Analysis of Aggregate Supply
OBJECTIVES
Students shall be able to
Explain the difference between the short-run and long-run aggregate supply curves and their significance for economic policy.
Distinguish between demand-pull and cost-push inflation using the aggregate demand-aggregate supply model.
Explain and construct a traditional short-run Phillips Curve using the aggregate demand-aggregate supply model.
Differentiate between the short-run and long-run Phillips Curves.
Identify the supply side shocks to the U.S. economy in the 1970s and 1980s.
Use an aggregate demand aggregate supply graph to show how supply side shocks led to stagflation in the 1970s and 1980s.
Explain why demand management policies cannot eliminate stagflation.
Distinguish between demand pull and cost push inflation using the aggregate demand aggregate supply model.
Explain two possible effects of taxation on aggregate supply.
Explain the Laffer Curve concept and list three criticisms of this theory.
Define and identify terms at the end of the chapter.
ACTIVITIES
Lecture/Discussion: The extended AD/AS model and the Phillips and Laffer Curves
Assignments:
Lecture/Discussion: The extended AD/AS model and the Phillips and Laffer Curves
ASSESSMENT PROCEDURES
Monitor and adjust to check understanding.