Matakuliah
Tahun
: J0594-Teori Ekonomi
: 2009
EXTENDING THE ANALYSIS OF
AGGREGATE SUPPLY
Pertemuan 12
From Short Run To Long Run
•
•
•
•
Short Run
Long Run
Short-Run Aggregate Supply
Long-Run Aggregate Supply
Graphically
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3
From Short Run To Long Run
a2
P2
a1
AS1
a3
P1
P3
ASLR AS2
Qf
Q2
Real Domestic Output
a2
b1
P2
AS1
AS3
a1
P1
P3
Q3
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Long-Run
Aggregate Supply
Price Level
Price Level
Short-Run
Aggregate Supply
a3
c1
Qf
Real Domestic Output
4
From Short Run To Long Run
Equilibrium in the
Extended AD-AS Model
Price Level
ASLR
AS1
a
P1
AD1
Qf
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Real Domestic Output
5
From Short Run To Long Run
Demand-Pull Inflation in the
Extended AD-AS Model
Price Level
ASLR
AS2
AS1
b
P3
c
P2
a
P1
AD2
AD1
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Qf
Real Domestic Output
6
From Short Run To Long Run
Cost-Push Inflation in the Extended
AD-AS Model
If Government Counters Recession With Spending…
If Government Ignores Recession…
Price Level
ASLR
P1
AS1
c
P3
P2
AS2
b
a
AD2
AD1
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Qf
Real Domestic Output
7
From Short Run To Long Run
Recession in the
Extended AD-AS Model
Price Level
ASLR
P3
AS2
a
P1
P2
AS1
b
c
AD1
AD2
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Q1 Qf
Real Domestic Output
8
The Inflation-Unemployment
Relationship
The Short-Run Effect of Changes on Real
Output and the Price Level
Price Level
AS
P3
P2
AD3
P1
P0
AD2
AD1
0
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AD0
Q0 Q1 Q2 Q3
Real Domestic Output
9
The Inflation-Unemployment RelationshipO 15.1
• The Phillips Curve
– Inverse Relationship
– Inflation and Unemployment
Empirical Data
Data for the 1960s
7
6
5
4
3
2
1
0
0
1
2
3
4
5
6
Unemployment Rate (Percent)
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7
Annual Rate of Inflation (Percent)
Annual Rate of Inflation (Percent)
Concept
7
69
6
5
68
4
66
67
3
65
2
1
64
63
62
61
0
0
1
2
3
4
5
6
7
Unemployment Rate (Percent)
10
The Inflation-Unemployment
Relationship
• Adverse Supply Shocks and the Phillips
Curve
– Stagflation
• Adverse Aggregate Supply Shocks
– OPEC Oil Price Shock
– Stagflation’s Demise
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The Inflation-Unemployment
Relationship
•
•
•
•
Long-Run Phillips Curve
Short-Run Phillips Curve
Long-Run Vertical Phillips Curve
Disinflation
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The Inflation-Unemployment Relationship
The Long-Run Vertical Phillips Curve
PCLR
Annual Rate of Inflation (Percent)
15
PC3
12
b3
PC2
9
a3
b2
PC1
6
a2
c3
a1
c2
b1
3
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0
3
4
5
6
Unemployment Rate (Percent)
13
Taxation and Aggregate Supply
•
•
•
•
Supply-Side Economics
Tax Incentives to Work
Tax Incentives to Save and Invest
The Laffer Curve
Tax Rate (Percent)
100
n
m
Laffer Curve
m
l
Maximum
Tax Revenue
0
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Tax Revenue (Dollars)
14
Taxation and Aggregate Supply
• Criticisms of The Laffer Curve
– Taxes, Incentives, and Time
– Inflation and Higher Real Interest
Rates
– Position on the Curve
• Rebuttal and Evaluation
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15