AP Macroeconomics Module 18

changes in nominal wages

an economy wide rise in the cost of something like health care insurance, its seen as an equilivant to the rise of nominal wages. A rise of nominal wages increases production costs adn shifts the short-run agg supply curve -vice-versa for economy - wide fall in sum

change sin expectations about inflation

if inflation is expected to be higher than previously thought, workers will seek higher nominal wages to keep up with higher prices. If inflation is high and worker demand higher nominal wages the short run ASC shifts left.

changes in productivity

increase in productivity means a worker can produce more units of output with the same quantity of inputs. Shifts it to the right

changes in commodity prices

oil is a commodity. when prices surged, prices across the economy were raised and reduced the agg output so the curve was shifted left. -These are not a final good, their prices are not included in the calc of the APL. they do represent a large cost of production costs

profit per unit

profit per unit of output = price per unit of output - production cost per unit of output

Long-run aggregate supply curve

shows teh relationship between the APL and the quantity of aggregate output supplied that would exist if all prices, including nominal wages, were fully flexible. Its vertical cuz changes in APL have no effect. The x-int is the potential output

short-run aggregate supply curve

shows the pos relationship between the APL and the quantity of agg output supplied that exists in the short run. -a decrease means a L shift of the curve -an increase means a R shift of the curve -

aggregate supply curve

shows the relationship between the aggregate price level and the quantity of aggregate output supplied in the economy

nominal wage

the dollar amount of the wage paid

full-employment level of output

the level of RGDP the econ can produce if all resourves are fully employed. This can describe potential output as well

potential output

the level of real GDP the econ would produce if all prices, incl nominal wages, were fully flexible

sticky wages

the nominal wages that are slow to fall even in the face of high unemployment and slow to rise even in teh face of labor shortages