2. EXTENDING THE ANALYSIS OF AGGREGATE SUPPLY Pertemuan 12
Matakuliah : J0594-Teori Ekonomi
Tahun : 2009
EXTENDING THE ANALYSIS OF AGGREGATE SUPPLY Pertemuan 12

3. From Short Run To Long Run
Short-Run Aggregate Supply
Long-Run Aggregate Supply
Graphically
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4. From Short Run To Long Run
Aggregate Supply
Long-Run
Aggregate Supply
AS1
ASLR
AS2 a1
AS1 a2 b1 a2
AS3 P2 P2 a3
Price Level a1
Price Level P1 P1 a3 P3 P3 c1 Q3 Qf Q2 Qf
Real Domestic Output
Real Domestic Output
Bina Nusantara University

5. From Short Run To Long Run
Equilibrium in the
Extended AD-AS Model
ASLR
AS1
Price Level P1 a
AD1 Qf
Bina Nusantara University
Real Domestic Output

6. From Short Run To Long Run
Demand-Pull Inflation in the
Extended AD-AS Model
AS2
ASLR
AS1 P3 b P2 c
Price Level P1 a
AD2
AD1 Qf
Bina Nusantara University
Real Domestic Output

7. From Short Run To Long Run
Cost-Push Inflation in the Extended
AD-AS Model
If Government Counters Recession With Spending…
If Government Ignores Recession…
AS2
ASLR
AS1 P3 c P2 b
Price Level P1 a
AD2
AD1
Bina Nusantara University Qf
Real Domestic Output

8. From Short Run To Long Run
Recession in the
Extended AD-AS Model
ASLR
AS1
AS2 P1 a P2 b
Price Level P3 c
AD1
AD2
Bina Nusantara University Q1 Qf
Real Domestic Output

9. The Inflation-Unemployment Relationship
The Short-Run Effect of Changes on Real Output and the Price Level AS P3
Price Level P2
AD3 P1
AD2 P0
AD1
AD0
Bina Nusantara University Q0 Q1 Q2 Q3
Real Domestic Output

10. The Inflation-Unemployment Relationship
The Phillips Curve
Inverse Relationship
Inflation and Unemployment
Empirical Data
Data for the 1960s
Concept
Annual Rate of Inflation (Percent)
Unemployment Rate (Percent)
Unemployment Rate (Percent)
Annual Rate of Inflation (Percent) 7 7 69 6 6 5 5 68 4 4 66 67 3 3 65 2 2 63 62 61 1 1 64 1 2 3 4 5 6 7 1 2 3 4 5 6 7
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11. The Inflation-Unemployment Relationship
Adverse Supply Shocks and the Phillips Curve
Stagflation
Adverse Aggregate Supply Shocks
OPEC Oil Price Shock
Stagflation’s Demise
Bina Nusantara University

12. The Inflation-Unemployment Relationship
Long-Run Phillips Curve
Short-Run Phillips Curve
Long-Run Vertical Phillips Curve
Disinflation
Bina Nusantara University

13. The Inflation-Unemployment Relationship
The Long-Run Vertical Phillips Curve
PCLR 3 6 9 12 15
PC3 b3
PC2 a3
Annual Rate of Inflation (Percent) b2
PC1 a2 c3 b1 a1 c2
Bina Nusantara University 3 4 5 6
Unemployment Rate (Percent)

14. Taxation and Aggregate Supply
Supply-Side Economics
Tax Incentives to Work
Tax Incentives to Save and Invest
The Laffer Curve
100 n
Laffer Curve
Tax Rate (Percent) m m
Maximum
Tax Revenue l
Tax Revenue (Dollars)
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15. Taxation and Aggregate Supply
Criticisms of The Laffer Curve
Taxes, Incentives, and Time
Inflation and Higher Real Interest Rates
Position on the Curve
Rebuttal and Evaluation
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