Unit 3
National Income and Price Determination

3.1 Aggregate Demand (AD)

​LEARNING OBJECTIVE:
a. Define (using graphs as appropriate) the aggregate demand (AD) curve
b. Explain (using graphs as appropriate) the slope of AD curve and its determinants

3.2 Multipliers

​​LEARNING OBJECTIVE:
a. Define the expenditure multiplier, the tax multiplier, the marginal propensity to
​    consume, and the marginal propensity to save
b. Explain how changes in spending and taxes lead to changes in real GDP
c. Calculate how changes in spending and taxes lead to changes in real GDP

3.3 Short-Run Aggregate Supply (SRAS)

​​LEARNING OBJECTIVE:
a. Define (using graphs as appropriate) the short-run aggregate supply (SRAS) curve
b. Explain (using graphs as appropriate) the slope of SRAS curve and its determinants
c. Explain (using graphs as appropriate) how movement along the SRAS curve implies
    a relationship between the price level (and inflation) and unemployment

3.4 Long-Run Aggregate Supply 

​​LEARNING OBJECTIVE:
a. Define (using graphs as appropriate) the short run and the long run
b. Define (using graphs as appropriate) the long-run aggregate supply (LRAS) curve

3.5 Equilibrium in the Aggregate Demand
      Aggregate Supply (AD-AS) Model 

​​LEARNING OBJECTIVE:
Explain (using graphs as appropriate) the short-run and long-run equilibrium price
​    level and output level

3.6 Changes in AD-AS Model in the Short Run

​​​LEARNING OBJECTIVE:
Explain (using graphs as appropriate) the response of output, employment, and the
    price level to an aggregate demand or aggregate supply shock in the short run

3.7 Long-Run Self-Adjustment

​​​LEARNING OBJECTIVE:
Explain (using graphs as appropriate) the response of output, employment, and the
    price level to an aggregate demand or aggregate supply shock in the long run

3.8 Fiscal Policy

​​​LEARNING OBJECTIVE:
a. Define fiscal policy and related terms
b. Explain (using graphs as appropriate) the short run effects of a fiscal policy action
c. Calculate the short-run effects of a fiscal policy action
d. Define why there are lags to discretionary fiscal policy

3.9 Automatic Stabilizers

​​​LEARNING OBJECTIVE:
a. Define automatic stabilizers
b. Explain how automatic stabilizers moderate business cycles
National Income and Price determination