00:01
We're going to be looking at an analysis to describe the supply side effects of a fiscal stimulus and explain how a text card will influence potential gdp.
00:13
Okay, so we want to look at examples of supply side stimulus, supply side stimuli that can be given.
00:25
Okay.
00:25
All right so the first one to look at obviously is cutting taxes which you're going to look at in a little more detail cutting taxes and another one could be deregulating deregulating industries this is essentially where there's a lot of barriers to business and in a particular country and so forth.
01:01
So deregulating industries allows for firms to come in and engage in productive activities to the extent that the government is able.
01:12
You can also include lowering borrowing rates, lowering, borrowing rates.
01:22
And yeah, so those are some examples in which we can look at that analysis.
01:28
But more importantly is to look at how that how those factors, how the stimulus can actually affect potential gdp.
01:38
So we can actually make use of a diagram of aggregate demand versus aggregate supply.
01:46
So if we have aggregate demand and aggregate supply, we're going to call this ado, we're going to call this as aggregate supply o.
01:57
So you will note that there is an original price level.
02:03
So let's just label the axis properly.
02:07
So we have gdp and we have the price level...