Macro Ex. 3 - March 25 lecture

  • Class Structure and Approach

    • Students should consider if they have questions before the upcoming class.
    • Relaxed teaching approach leading up to the test date.
    • Review material instead of introducing new concepts.

  • Key Exam Dates

    • Reminder about upcoming test on April 3.

  • Graph Interpretation Questions on the Test

    • Students will be given graphs similar to those discussed in class.
    • Focus on identifying long-run equilibrium from graphs of curves.
    • Example:
    • Long Run Equilibrium
      • Points A and C are potential long run equilibrium points.
      • All three curves (aggregate demand, short run aggregate supply, and long run aggregate supply) must intersect.

  • Short Run vs Long Run Equilibrium

    • Short run equilibrium occurs at a different point when aggregate demand shifts.
    • Example:
      • If the aggregate demand shifts right from 81 to 82, the new short run equilibrium at point D.
    • Without government intervention, the aggregate supply curve will adjust back over time, leading to a new long run equilibrium.

  • Shifts in Aggregate Demand and Supply

    • The factors that shift the aggregate demand and supply curves include:
    • Changes in consumer expectations.
    • Government intervention (to be discussed in future classes).

  • Example Questions

    • Questions will test understanding of shifts in the curves based on hypothetical scenarios.
    • Example: What happens if net exports decline?
    • Aggregate demand decreases leading to shifts in equilibrium.

  • Economic Concepts Covered

    • Understanding how changes in costs impact supply curves.
    • Impact of increased price levels on the economy (stagflation defined).
    • Relationship between consumers’ expectations and economic performance.

  • Dynamic Model vs Static Model

    • Distinction between dynamic aggregate supply models (shifting in the long run) and static models (fixed short run conditions).
    • Growth and inflation trends in the economy represented graphically.

  • Demand and Supply Strategies

    • Potential questions may address employing various supply and demand strategies to reach equilibrium.

  • Graphs and Visuals

    • Importance of clear labeling in graphs for exams.
    • Key terms to label on graph:
    • Long Run Aggregate Supply (LRAS), Short Run Aggregate Supply (SRAS), and Aggregate Demand (AD).

  • General Exam Strategies

    • Utilize graphs effectively to support answers in economic concept questions.
    • Practice drawing and labeling graphs to prepare for visual-based questions.
    • Review expectations for analyzing shifts due to economic changes, such as exports and consumer behavior.

  • Professors Remarks

    • Friendly banter among students but stresses the importance of understanding material.
    • Emphasis on practical application of concepts learned in class for the upcoming test.
    • Recap of the teaching strategy to engage students and clarify any misunderstandings.

Final Reminders

  • Encourage participation and queries in the next sessions leading closer to the exam date.
  • Review and practice graphing techniques in preparation for graphical analysis on the test.