Download Chapter 14: Aggregate Demand and Supply

Chapter 20: Aggregate Demand and Supply
LEARNING OBJECTIVES
The steps to achieve the learning objectives include reading sections from your textbook and the
“causation chain game,” which is available directly on the Tucker web site. The steps also include
references to “Ask the Instructor Video Clips,” the “Graphing Workshop” available through
CourseMate on the Tucker website.
#1 - Understand aggregate demand curve theory.
Step 1
Read the sections in your textbook titled “Aggregate Demand Curve,” “Reasons for the
Aggregate Demand Curve’s Shape,” and “Nonprice-Level Determinants of Aggregate
Demand.”
*Step 2
Watch the Graphing Workshop “See It!” tutorial titled “Aggregate Demand.” Study
how the aggregate demand curve is derived.
Step 3
Play the “Causation Chains Game” titled “The Aggregate Demand Curve.”
Step 4
Play the “Causation Chains Game” titled “A Shift in the Aggregate Demand Curve.”
The Result
Following these steps, you have learned that the aggregate demand curve is downwardsloping and that changes in the price level (CPI) cause movements along the AD curve.
Any factor that changes consumption (C), investment spending (I), government spending
(G), or net exports (X - M) shifts the AD curve.
# 2 - Understand aggregate supply curve theory and changes in macroeconomic equilibrium.
Step 1
Read the sections in your textbook titled “Three Ranges of the Aggregate Supply Curve,”
“Changes in the AD-AS Macroeconomics Equilibrium,” and “Nonprice-Level
Determinants of Aggregate Supply.”
Step 2
Read the Graphing Workshop “Grasp It!” exercise titled “Aggregate Demand” and
“Changes in Aggregate Demand.” These exercises use a slider bar to demonstrate how
changes in aggregate demand and supply curves change the price level and level of real
GDP.
Step 3
Create new graphs at the Graphing Workshop “Try It!” titled “Aggregate Demand.”
This exercise illustrates the impact of increased government spending on macro
equilibrium.
Step 4
Play the “Causation Chains Game” titled “The Keynesian Horizontal Aggregate Supply
Curve.”
Step 5
Play the “Causation Chains Game” titled “The Classical Vertical Aggregate Supply
Curve.”
Step 6
Play the “Causation Chains Game” titled “A Rightward Shift in the Aggregate Supply
Curve.”
Step 7
Listen to the Ask the Instructor Video Clip” titled “Can the Aggregate Supply Curve
Take on Different Shapes?” You will learn the conditions that determine the three ranges
of the aggregate supply curve.
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Step 8
Listen to the Ask the Instructor Video Clip” titled “What Circumstances Can Shift the
Aggregate Supply?” You will learn factors that can increase or decrease the aggregate
supply curve.
The Result
Following these steps, you have learned the aggregate supply curve has three ranges: (1)
Keynesian range, (2) intermediate range, and (3) classical range. Changes in aggregate
demand along these three ranges have various effects on the price level, real GDP, and
the unemployment rate.
#3 - Distinguish between cost-push and demand-pull inflation.
Step 1
Read the section in your textbook titled “Cost-Push and Demand-Pull Inflation
Revisited.”
Step 2
Create a new graph at the Graphing Workshop “Try It!” titled “Types of Inflation.” This
exercise illustrates the case of demand-pull inflation.
Step 3
Read the Graphing Workshop “Grasp It!” exercise titled “Types of Inflation.” This uses
a slider bar to demonstrate the difference between cost-push and demand-pull inflation.
Step 4
Play the “Causation Chains Game” titled “Cost-Push and Demand-Pull Inflation.”
Step 5
Listen to the Ask the Instructor Video Clip” titled “Why Was Unemployment Higher in
the 1970s than in the 1990s?” You will learn the causes of cost-push inflation in the
1990s.
Step 6
Listen to the Ask the Instructor Video Clip” titled “Is One Type of Inflation Worse than
Another?” You will learn the difference between demand-pull and cost-push inflation.
Read the EconDebate article titled “Should the Strategies of Petroleum Reserve Be Used
to Reduce Fluctuations in Oil Prices?” This article describes ‘stagflation’ in the 1970s.
Step 7
The Result
Following these steps, you have learned that demand-pull inflation is caused by increases
in the aggregate demand curve and cost-push inflation in the aggregate supply curve.
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