ECSENOMICS Chapter 33 The Warring schools of macroeconomics McGraw-Hilllrwin Copyright@ 200/ The McGraw-Hill Companies, Inc. All rights reserved
McGraw-Hill/Irwin Copyright © 2001 The McGraw-Hill Companies, Inc. All rights reserved. Chapter 33 The Warring Schools of Macroeconomics
ECSENOMICS According to Says Law, Supply Creates Its Own Demand as Prices move to balance Demand with Aggregate Supply T252 Figure 33-1 utput AD AD′ Q=Q′=Q Real output McGraw-Hilllrwin Copyright C 2001 The McGraw-Hill Companies, Inc. All rights reserved
McGraw-Hill/Irwin Copyright © 2001 The McGraw-Hill Companies, Inc. All rights reserved. T-252 Figure 33-1 According to Say’s Law, Supply Creates Its Own Demand as Prices Move to Balance Demand with Aggregate Supply
ECSENOMICS Aggregate Demand Helps Determine C Output in the Keynesian Approach T253 Figure 33-2 Potential AS 8 AS AD AD Q Q Real output McGraw-Hilllrwin Copyright C 2001 The McGraw-Hill Companies, Inc. All rights reserved
McGraw-Hill/Irwin Copyright © 2001 The McGraw-Hill Companies, Inc. All rights reserved. Aggregate Demand Helps Determine Output in the Keynesian Approach T-253 Figure 33-2
ECSENOMICS Velocity and Its components 1929-1995 T254 Figure 33-3 10,000 1.000 2=865=558E55 M, (left scale) Nominal GDP (left scale) ≥ Velocity (right scale 1920193019401950196019701980 1990200 Y McGraw-Hilllrwin Source: V constructed by the authors from the data from the Fe de ral Reserve board
McGraw-Hill/Irwin Copyright © 2001 The McGraw-Hill Companies, Inc. All rights reserved. Velocity and Its Components, 1929-1995 T-254 Figure 33-3 Source: V constructed by the authors from the data from the Federal Reserve Board and the U.S. Department of Commerce
ECSENOMICS Comparison of monetarist and Keynesian Views T255 Figure 33-4 (a) Monetarist Approach (b) Keynesian Approach AS only M. G.-TX AD AD Real output Real output McGraw-Hilllrwin Copyright C 2001 The McGraw-Hill Companies, Inc. All rights reserved
McGraw-Hill/Irwin Copyright © 2001 The McGraw-Hill Companies, Inc. All rights reserved. Comparison of Monetarist and Keynesian Views T-255 Figure 33-4