1. April 4, 2014 1. Missed exam day(s) last week??? 2. Unit V Quick Intro: Inflation, Unemployment, & Stabilization Policies (20-30% of AP Macro Exam) 3. Unit Exam Date: Thursday, April 17 th 4. Review past 2 days… 5. Notes: Policy Effects on AS 6. HW: Activities 5-4 and 5-5 7. Quiz: Fiscal Policy- Monday!

2. Policy Effects on Aggregate Supply  Fiscal & Monetary Policy affect the economy through changes in AD.  Also policies that can affect SRAS and LRAS.  Recall the SRAS determinants: 1. Economy wide input prices (labor, oil) 2. Wages 3. Advanced Technology  Recall the LRAS determinants: 1. Available resources 2. Higher quality resources 3. Advanced technology

3. Shifts of the Short-Run Aggregate Supply Curve  A supply shock is a change in costs that shifts the aggregate supply (AS) curve.

4. Long-Run Aggregate Supply and Policy Effects  If the AS curve is vertical in the long run, neither monetary policy nor fiscal policy has any effect on aggregate output. In the long run, the multiplier effect of a change in government spending or taxes on aggregate output is zero.