Aggregate demand and aggregate supply model

4. List of required drawings
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5. Schedule of course work

#	The name of the work	The duration of the work		Sign about fulfillment
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1	Collecting literature about the topic
2	Making a plan of work
3	Preparation and writing of first chapter
4	Preparation and writing of second chapter
5	Preparation and writing of third chapter
6	Preparation and writing of fourth chapter
7	Presenting completed coursework to superviser

Date of assignment: "_____"_________________201_y.

The date of submission of completed coursework is "_____"_______________ 201_y.
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(signature) (name)
I received the assignment __________ ____________________________
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"______" ______________201_y.
Head of department _________ ______________________
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Faculty of Management in Production, ______ Groups student ____________________________________________ coursework on the topic of_____________________________________________________________________________________________________________________________________________

REVIEW
1. Relevance and content of the work_________________________________________ _____________________________________________________________________________________________________________________________________________________________________________________________________________________
2. Description of the sections of work_________________________________________ _____________________________________________________________________________________________________________________________________________________________________________________________________________________
3. Positive aspects of work_________________________________________________ _____________________________________________________________________________________________________________________________________________________________________________________________________________________
4. Negative aspects of work_________________________________________________ ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
5. Formalization of the explanatory part_______________________________________ ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
6. Formalizing the graphic part of the work____________________________________ ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
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CONTENT
INTRODUCTION………………………………………………………………2
1.Aggregate Demand and Supply………………………………………………4
2.it’s used to illustrate……………………………………………………………12
3.Kelements of the model……………………………………………………….19
4.Aggregate Demand…………………………………………………………….22
5.Some examples of questions that can be answered using that model………..27
Conclusion………………………………………………………………………..31
Used literature…………………………………………………………………….32

INTRODUCTION

In macroeconomics, we seek to understand two types of equilibria, one corresponding to the short run and the other corresponding to the long run. The short run in macroeconomic analysis is a period in which wages and some other prices do not respond to changes in economic conditions. In certain markets, as economic conditions change, prices (including wages) may not adjust quickly enough to maintain equilibrium in these markets. A sticky price is a price that is slow to adjust to its equilibrium level, creating sustained periods of shortage or surplus. Wage and price stickiness prevent the economy from achieving its natural level of employment and its potential output. In contrast, the long run in macroeconomic analysis is a period in which wages and prices are flexible. In the long run, employment will move to its natural level and real GDP to potential.
We begin with a discussion of long-run macroeconomic equilibrium, because this type of equilibrium allows us to see the macroeconomy after full market adjustment has been achieved. In contrast, in the short run, price or wage stickiness is an obstacle to full adjustment. Why these deviations from the potential level of output occur and what the implications are for the macroeconomy will be discussed in the section on short-run macroeconomic equilibrium.
The Long Run
As we saw in a previous chapter, the natural level of employment occurs where the real wage adjusts so that the quantity of labor demanded equals the quantity of labor supplied. When the economy achieves its natural level of employment, it achieves its potential level of output. We will see that real GDP eventually moves to potential, because all wages and prices are assumed to be flexible in the long run.
Long-Run Aggregate Supply

The long-run aggregate supply (LRAS) curve relates the level of output produced by firms to the price level in the long run. In Panel (b) of Figure 22.4 "Natural Employment and Long-Run Aggregate Supply", the long-run aggregate supply curve is a vertical line at the economy’s potential level of output. There is a single real wage at which employment reaches its natural level. In Panel (a) of Figure 22.4 "Natural Employment and Long-Run Aggregate Supply", only a real wage of ωe generates natural employment Le. The economy could, however, achieve this real wage with any of an infinitely large set of nominal wage and price-level combinations. Suppose, for example, that the equilibrium real wage (the ratio of wages to the price level) is 1.5. We could have that with a nominal wage level of 1.5 and a price level of 1.0, a nominal wage level of 1.65 and a price level of 1.1, a nominal wage level of 3.0 and a price level of 2.0, and so on.