Examples of supply curve movements, demand curves and supply curve movements

The movement of the Phillips curve.

The Phillips curve is sometimes described as a kind of "menu of choices between inflation and unemployment." A closer examination of history can reveal an even more complex and fascinating story. In the process of tracing historical events, the key is to distinguish between actual inflation and inflation with inertia.

Inertial inflation is the rate of inflation that is internalized in the economy or expected at a certain point in time. However, there are always unexpected events (such as a change in oil** or a freeze in Florida). When unexpected events occur, the actual inflation rate may deviate from the inertial or expected inflation rate.

Rapid economic growth and low unemployment during the Vietnam War led to a race to the top of wages – a demand shock that caused real inflation to exceed inertial or expected inflation, but after the rise in real inflation, inertial inflation followed. As a result, by the early 70s, inflation with inertia was 5, not 1 in the early 60s.

There was no incident until 1973, and the rise in oil prices in 1973 pushed inflation to 11. Inflation with inertia followed again, rising to 7. In 1979 there was a second oil shock, which caused inertial inflation to rise to 8 or 9.

But in 1979-1980, policymakers were determined to wage war on inflation at no cost, and the ensuing recession did dampen the economy. With the help of monetary tightening, real inflation fell from 13 in 1980 to 4 in 1984, and inertial inflation followed suit.

The above narrative points out the key flaws of the early Phillips curve:

The commutative relationship between inflation and unemployment can only be stable if inertial inflation remains constant. However, when the inflation rate with inertia changes, the short-term Phillips curve will move.

As soon as real inflation rises above the rate of inertia, people adapt to the new situation. They began to expect higher inflation. There is inertial inflation.

When there is an inertial or expected change in inflation, the Phillips curve can become unreliable. For example, the Vietnam War, the first oil shock and the second oil shock both pushed inflation upwards with inertia. Then, the period of monetary tightening after 1979 led to an "inflation reversal" and a consequent decrease in the speed of inertia.

Question: What happens now when the inertial inflation rate of loans rises or falls? (The index represented here is the Consumer Instruction (CPI.)

Recently, the state plans to issue trillions of treasury bonds, but the result is a sharp fall.

For this situation, I think that the explanation in macroeconomics is: first, the issuance of government bonds will lead to the fact that the country has money for construction, that is, to increase ** purchases, so that the IS curve shifts to the right; Second, the issuance of Treasury bonds will reduce the amount of money in circulation, which will cause the LM curve to shift to the left. This will eventually lead to an increase in interest rates, and investment will decrease as interest rates rise; In addition, the issuance of treasury bonds will reduce the currency in **, causing ** to fall sharply.

The demand curve represents the number of goods demanded under each **. The demand curve is a curve that shows the relationship between ** and the demand quantity, which refers to the table or curve of the amount of goods that buyers are willing to buy at each ** level when other conditions are equal. The demand is not observable.

Demand curves can appear in any shape, and demand curves that conform to the demand theorem can only be sloping down to the right. The demand curve is usually based on the vertical axis (y-axis) and the demand quantity as the horizontal axis (x-axis), in a demand curve that slopes down to the right and is a straight line, the elasticity of demand at the point is equal to one, and the elasticity of the above part of the demand is greater than one, and the elasticity of the demand of the following part is less than one.

Supply curves. is based on geometric figures.

Represents the functional relationship between the ** of the commodity and the quantity of supply. To put it simply, it refers to the curve that links ** with the amount of supply. Duan Tanchong supply refers to the quantity of individual manufacturers who are willing and have the best quantity of a certain commodity within a certain period of time and under certain conditions.

The supply curve slopes to the upper right because, all else being equal, higher means more supply.

The official website shall prevail.

The movement of the supply curve is different from the movement along the supply curve: the movement along the curve is the change of quantity with the change of ** under the condition that other conditions other than the commodity itself (such as cost, technology level, related commodity ** and producer's expectation of the future** are unchanged, etc.). The curve movement is due to other conditions changing.

Reasons for the change in the supply curve:

First: natural and man-made disasters. For example, a war would dramatically reduce the total supply of the economy, even if the aggregate supply curve was obtained.

Move to the top left.

Second: technical changes.

Third: changes in factors such as wage rates**. The aggregate supply curve is derived under the assumptions given by the wage rate, so that changes in the wage rate will move the aggregate supply curve.

When wages fall, manufacturers are willing to supply more products for any given aggregate level, so lowering wages will shift the aggregate supply curve to the lower right; Conversely, wages rise and the aggregate supply curve shifts to the upper left.

In addition, the aggregate supply curve of the raw material economy has also shifted to the upper left.

Supply curve: The so-called supply refers to the quantity of individual manufacturers who are willing and have the best quantity of a commodity within a certain period of time and under certain conditions. Two conditions: one is that the manufacturer is willing to **; The second is that the manufacturer has the best goods, and the two are indispensable.

The supply curve is based on geometric figures.

Represents the functional relationship between the ** of the commodity and the supply, supply.

The supply curve is a curve drawn on the plane coordinate graph according to the **-supply combination of commodities in the supply table.

Generally speaking, there will be a positive correlation between supply and **. The factors that affect the supply include: the commodity itself, the cost of production, the technical level of production, the relevant commodity and the producer's expectations for the future.

If we look at supply as a function of a single factor, then we can draw a supply curve. Moving along the supply curve, that is, the form of the function itself does not change, but the **p changes, which brings about a change in the supply q. A change in the supply curve means that the entire form of the function changes.

**Even if it doesn't change, the supply will change. That's pretty much it.

"Supply" refers to the supply curve.

position, and "supply" refers to the quantity that the supplier wants. In this example, the supply has not changed because the weather has not changed the company's desire to sell at any given time. Conversely, hot weather changes consumers' desire to buy at any given time, thus shifting the demand curve.

Increased demand causes equilibrium**.

Rise. When ** rises, the supply increases. This increase in supply is expressed as a change along the supply curve.

In summary, the supply curve movement is called the "supply change", while the demand curve movement is called the "demand change". A move along a fixed supply curve is called a "change in supply", while a move along a fixed demand curve is called a "change in demand".

Example: Changes in supply Let's say that in another summer, several ice cream stores are destroyed.

Factory. How did this event affect the ice cream market? In order to solve this problem, we followed the steps of the three-dog eggplant.

1 ** Lifting the town affects the supply curve. By reducing the number of sellers, the amount of ice cream produced and sold by the enterprise at any given time is changed. The demand curve hasn't changed because it doesn't directly change the amount of ice cream families want to buy.

2 The supply curve shifts to the left because the total amount that firms are willing and able to ** decreases at any one time.

3 The shift of the supply curve increases the equilibrium** and decreases the number of equilibrium. As a result, the price of ice cream went up, while sales decreased.

Example: Both supply and demand fluctuate Now suppose that the weather is hot and the heat and ** occur at the same time. In order to analyze this combination of the two events, we still follow three steps.

resulting in a supply curve.

The moving factors are, natural and man-made disasters, changes in technology, changes in wage rates, etc.

The supply curve is based on geometric figures.

Representing the functional relationship between the ** of the commodity and the supply quantity, the supply curve is a curve drawn on the plane coordinate diagram according to the **-supply combination of the commodity in the supply table. Generally speaking, the supply and ** will be positively correlated with the macro. The factors that affect the supply include: the commodity itself, the cost of production, the technical level of production, the relevant commodity and the producer's expectations for the future.

Typical labor market.

The supply curve is irregular. Wages rise to a certain level, and as wages rise, the supply of workers' labor decreases, and the curve curves back to the left. The supply curve of the special commodity market may be irregular. A straight line perpendicular to the horizontal axis is presented.

In the face of changes in the supply curve, the first step is to analyze what factors will cause the change in the curve. Because the meaning of supply is to provide goods and services through production or labor, the most fundamental thing here is productivity. It is the technical factor that can greatly affect the productivity, and with the improvement of productivity, more supply can be provided under the same **.

This is from the perspective of the impact of productivity on supply, but the most fundamental factor of supply is still based on demand. The demand of the market determines the overall supply, productivity affects the size of supply, and competition affects the supply curve of individual suppliers.

The supply curve can be used to analyze the international equilibrium, as a supply curve, indicating that under different conditions, a country is willing to provide the amount of export products provided by Qingdan, and if the exports are relatively high, the country will increase the supply of exports; As a demand curve, it indicates the amount of demand for imported products in this country under different conditions, and if the imported products decline relatively, the country will increase imports of such products. Therefore, the two factors of supply and demand in the international ** are combined in the supply curve, so the supply curve can be used to analyze the international equilibrium.

Hello, depending on the situation:

1. The movement of the IS Qudan hidden line is caused by the change of spontaneous expenditure, and the factors that affect the movement of the IS curve include changes in investment, changes in savings, changes in purchases, and changes in taxes, as follows:

1. Investment changes.

The level of investment increases, and investment increases by the same amount at different interest rates. Therefore, if the investment increases i, the investment curve i(r) shifts to the right i, which will shift the is curve to the right, and its movement to the right is equal to the movement of i(r) multiplied by the investment multiplier k, i.e., the movement of the is curve is k i.

2. Changes in savings.

Assuming that investment remains the same, if the level of savings increases by s, the level of consumption decreases by s, and the IS curve shifts to the left by the amount of k s. Similarly, the reduction in savings shifts the IS curve to the right, and its movement is also k s.

3. Tax changes.

An increase in taxes is similar to a decrease in investment or consumption, and a decrease in taxes is similar to an increase in investment or consumption. Therefore, an increase in tax revenue will shift the IS curve parallel to the left, and a decrease in tax revenue will shift the IS curve parallel to the right, and the amount of movement is the product of the tax multiplier and the change in tax revenue, i.e., kt t.

4. **Purchase changes.

The effect of increasing ** purchase expenditure on national income is similar to that of increasing investment in the mold fiber hall, so that the IS curve will shift parallel to the right, and the amount of movement is the product of **purchase expenditure increment and **purchase expenditure multiplier, i.e., kg g. ** Increased spending has a crowding out effect on investment that is sagging behind investment.

Second, the classical area in the LM curve is a vertical straight line, at this time the curve is the steepest, the implementation of expansionary fiscal policy will lead to an increase in money demand, and at this time the increase in money demand will make the interest rate rise a lot, the more interest rates rise, the greater the crowding out effect, the result is that the fiscal policy is ineffective, that is, only raising interest rates can not increase income.

3. The AD curve is derived from IS and LM, so when discussing the influence of each parameter on the movement of the AD curve, it can be converted into the influence of each parameter on the movement of the IS and LM curve and thus affecting the movement of the AD curve. Let's first discuss the parameters that affect the movement of the IS curve, such as spontaneous consumption, e-spontaneous investment, G** purchase spending, TR** transfer payment, and T-tax.

Fourth, compared with the movement of the AS curve and the aggregate demand curve, the factors that make the aggregate supply curve move are relatively complex, and can only be briefly explained here.

1. Natural and man-made disasters.

2. Technical changes.

3. Changes in wage rates.

4. Changes in production capacity.

The position of the aggregate supply curve is constantly changing, and this change indicates the change in aggregate supply below a given level.