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- Compare and contrast the Keynesian and classical models of the economy.
- Take a look at supply and demand curves in both the Keynesian and classical economic models.
- Become familiar with the aggregate demand and aggregate supply (AD-AS) model.
- Describe the factors that can shift labor supply and labor demand.
- Explain the relationship between the marginal propensity to consume and aggregate demand.
- Understand how government spending can negatively affect private investment.
- Learn what determines aggregate supply.
- Discuss the effects of sticky wages on equilibrium.
- Explore examples of favorable and unfavorable supply shocks.
1. The Keynesian Model and the Classical Model of the Economy
Economists use two basic models to describe economic growth. In this lesson, you'll find out more about each one of these models using real-world examples. So buckle up your seatbelts!
2. Supply and Demand Curves in the Classical Model and Keynesian Model
See how economists illustrate aggregate supply and aggregate demand in the long-term and short-term using the Classical and Keynesian models. This lesson emphasizes the differences in the shape of the aggregate supply curve using these two models.
3. Aggregate Supply and Aggregate Demand (AS-AD) Model
Supply and demand models are useful for examining the behavior of one good or market, but what about looking at a whole economy? Luckily, the aggregate supply and aggregate demand model lets us do just that.
4. Understanding Shifts in Labor Supply and Labor Demand
Find out what the labor supply is and what causes it to change or shift. Learn about labor demand and what causes firms and markets to increase or decrease their demand for labor.
5. Marginal Propensity to Consume: Definition and Formula of the MPC
MPC or MPS, what category is higher when you have extra money? In this lesson, learn about the marginal propensity to consume, one of the most important assumptions underlying fiscal and monetary policy.
6. Government Spending, GDP, and Crowding Out Private Investment
When the government spends more than it earns, it has to borrow money, which has repercussions throughout the economy. In this lesson, learn how government spending can crowd out private investment in the market for loanable funds.
7. Aggregate Supply in the Economy: Definition and Determinants
Learn about one of the fundamental components of economics. Find out what aggregate supply is and seven of the most common areas that influence it in today's economy.
8. Aggregate Supply in the Short Run
Learn about aggregate supply in the short run (SRAS) and what that really means. Find out how the overall price of goods affects quantity supplied in the short run and other key determinants that can increase and decrease aggregate supply in this time period.
9. Sticky Wages and Prices: Effect on Equilibrium
With the help of real-world examples, this lesson explains Keynes' important observation that wages and prices often don't adjust quickly to changes in economic conditions
10. Favorable Supply Shocks & Unfavorable Supply Shocks
In this lesson you'll learn the definitions, causes and effects of the two types of supply shocks in the economy by looking at a fictitious economy as an example.
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