Lecture 12 Aggregate Supply and the Short-Run Tradeoff Between Inflation and Unemployment 1

2 Lecture 12. Aggregate Supply The Basic Theory of Aggregate Supply

3 Lecture 12. Aggregate Supply 1. The Sticky-Price Model 2. The Imperfect-Information Model

4 Lecture 12. Aggregate Supply Case Study: International Differences in the Aggregate Supply Curve

5 Lecture 12. Aggregate Supply Summary and Implications

6 Lecture 12. Aggregate Supply Summary and Implications

7 Lecture 12. Aggregate Supply Inflation, Unemployment, and the Phillips Curve

8 Lecture 12. Aggregate Supply The History of the Modern Phillips Curve Adaptive Expectations and Inflation Inertia Two Causes of Rising and Falling Inflation

9 Lecture 12. Aggregate Supply Case Study: Inflation and Unemployment in the United States

10 Lecture 12. Aggregate Supply The Short-Run Tradeoff Between Inflation and Unemployment

11 Lecture 12. Aggregate Supply The Short-Run Tradeoff Between Inflation and Unemployment

12 Lecture 12. Aggregate Supply FYI: How Precise Are Estimates of the Natural Rate of Unemployment?

13 Lecture 12. Aggregate Supply Disinflation and the Sacrifice Ratio Rational Expectations and the Possibility of Painless Disinflation Case Study: The Sacrifice Ratio in Practice

14 Lecture 12. Aggregate Supply Hysteresis and the Challenge to the Natural- Rate Hypothesis Hysteresis and the Long-Run Phillips Curve

15 Lecture 12. Aggregate Supply The Mother of All Models

16 Lecture 12. Aggregate Supply Conclusion