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| Name | The Short-Run Aggregate Supply Curve |
| Video Uploader | Video From Marginal Revolution University |
| Upload Date | This Video Uploaded At 09-05-2017 17:03:00 |
| Video Discription | In this video, we explore how rapid shocks to the aggregate demand curve can cause business fluctuations. As the government increases the money supply, aggregate demand also increases. A baker, for example, may see greater demand for her baked goods, resulting in her hiring more workers. In this sense, real output increases along with money supply. But what happens when the baker and her workers begin to spend this extra money? Prices begin to rise. The baker will also increase the price of her baked goods to match the price increases elsewhere in the economy. As prices increase, workers demand higher wages to be able to afford goods at a higher price. In this example, the increase in money supply initially increased nominal and real wages for the baker and her employees, but as prices begin to rise, real wages begin to fall, and workers can afford less. Overtime, the demand for the baker’s goods will fall to pre-spending levels. The takeaway? An increase in spending can increase output and growth in the short run, but not in the long run. To model this scenario, this video will show you how to draw a short-run aggregate supply curve. Let’s get started! Subscribe for new videos: http://bit.ly/1Rib5V8 Macroeconomics Course: http://bit.ly/1R1PL5x Next video: http://bit.ly/2pY2289 [8oQxzHgceBA] |
| Category | Education |
| Tags | economics | macroeconomics | aggregate demand-aggregate supply model | ad-as model | business cycles | business fluctuations | keynes |
