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1、The Aggregate Supply Aggregate Demand ModelCopyright ? 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Macroeconomics 7/e by Jackson and McIverSlides prepared by Muni Perumal, University of Canberra, Australia6-*The Aggregate Supply/ Aggregate Demand Model2012Copyright ? 2004 McGraw-Hill Australia Pty L
2、td PPTs t/a Macroeconomics 7/e by Jackson and McIverSlides prepared by Muni Perumal, University of Canberra, AustraliaCopyright ? 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Macroeconomics 7/e by Jackson and McIverSlides prepared by Muni Perumal, University of Canberra, Australia8-*Learning Objectiv
3、esIntroduce the Keynesian Aggregate Expenditure model and discuss the importance of the multiplier effect.Introduce the of aggregate demand and aggregate supply model. Copyright ? 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Macroeconomics 7/e by Jackson and McIverSlides prepared by Muni Perumal, Uni
4、versity of Canberra, AustraliaCopyright ? 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Macroeconomics 7/e by Jackson and McIverSlides prepared by Muni Perumal, University of Canberra, Australia7-*Autonomous Expenditure ChangesShifts in the AE curve due to changes in autonomous expenditureresult in ne
5、w equilibrium levels of output (GDP)how much output changes by depends on the size of the expenditure multiplierCopyright ? 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Macroeconomics 7/e by Jackson and McIverSlides prepared by Muni Perumal, University of Canberra, AustraliaCopyright ? 2004 McGraw-Hi
6、ll Australia Pty Ltd PPTs t/a Macroeconomics 7/e by Jackson and McIverSlides prepared by Muni Perumal, University of Canberra, Australia7-*Expenditure MultiplierA change in autonomous expenditure results in a change in equilibrium income that is a multiple of the initial changeThe multiplier is defi
7、ned as the ratio of the change in GDP arising from a change in autonomous spendingCopyright ? 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Macroeconomics 7/e by Jackson and McIverSlides prepared by Muni Perumal, University of Canberra, AustraliaCopyright ? 2004 McGraw-Hill Australia Pty Ltd PPTs t/a
8、Macroeconomics 7/e by Jackson and McIverSlides prepared by Muni Perumal, University of Canberra, Australia7-*Changes in Equilibrium GDP and the MultiplierPrivate spending (billions of dollars)Saving and investment(billions of dollars)0045o51049047045043020I0390 450 470 490 510Equilibrium GDPat I1 le
9、vel of investmentS(C + I ) 0390 450 470 490 510(C + I ) 1I1If I increases.Real GDPReal GDPCopyright ? 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Macroeconomics 7/e by Jackson and McIverSlides prepared by Muni Perumal, University of Canberra, AustraliaCopyright ? 2004 McGraw-Hill Australia Pty Ltd P
10、PTs t/a Macroeconomics 7/e by Jackson and McIverSlides prepared by Muni Perumal, University of Canberra, Australia7-*Changes in Equilibrium GDP and the MultiplierPrivate spending (billions of dollars)Saving and investment(billions of dollars)0045o51049047045043020I0430 450 470 490 510Equilibrium GDP
11、at I2 level of investment(C + I ) 0S430 450 470 490 510(C + I ) 2I2If I decreases.Real GDPReal GDPCopyright ? 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Macroeconomics 7/e by Jackson and McIverSlides prepared by Muni Perumal, University of Canberra, AustraliaCopyright ? 2004 McGraw-Hill Australia P
12、ty Ltd PPTs t/a Macroeconomics 7/e by Jackson and McIverSlides prepared by Muni Perumal, University of Canberra, Australia7-*The Multiplier EffectA change in autonomous spending gives rise to a larger change in GDPThe multiplier effect arises because initial increase in aggregate expenditure will in
13、duce successive rounds of increased expenditureCopyright ? 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Macroeconomics 7/e by Jackson and McIverSlides prepared by Muni Perumal, University of Canberra, AustraliaCopyright ? 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Macroeconomics 7/e by Jackson and M
14、cIverSlides prepared by Muni Perumal, University of Canberra, Australia7-*Multiplier and Marginal PropensitiesA relationship exists between the MPS (the amount of leakage) and the multiplierMultiplier = 1/MPS = 1/(1 MPC)The simple multiplier is defined as 1/MPS, when the leakage in the economy is on
15、ly savingCopyright ? 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Macroeconomics 7/e by Jackson and McIverSlides prepared by Muni Perumal, University of Canberra, AustraliaCopyright ? 2004 McGraw-Hill Australia Pty Ltd PPTs t/a Macroeconomics 7/e by Jackson and McIverSlides prepared by Muni Perumal, U