Chapter 13: Aggregate Demand and Aggregate Supply Analysis Yulei Luo SEF of HKU March 20, 2016
Learning Objectives 1. Identify the determinants of aggregate demand and distinguish between a movement along the aggregate demand curve and a shift of the curve. 2. Identify the determinants of aggregate supply and distinguish between a movement along the short-run aggregate supply curve and a shift of the curve. 3. Use the aggregate demand and aggregate supply model to illustrate the di erence between short-run and long-run macroeconomic equilibrium. 4. Use the dynamic aggregate demand and aggregate supply model to analyze macroeconomic conditions.
Aggregate Demand I In the short-run, real GDP uctuates around the long-run upward trend because of business cycles (BC). Real GDP and employment co-move during BC. I The BC also causes changes in prices and wages. Some rms react to a decline in sales by cutting back on production, but they may also cut the prices they charge and the wages they pay. I Aggregate demand and aggregate supply model: A model that explains short-run uctuations in real GDP and the price level. This model will help us analyze the e ects of recessions and expansions on production, employment, and prices.
I (Conti.) Aggregate demand curve (AD): A curve showing the relationship between the price level (PL) and the quantity of real GDP demanded by households, rms, and the government. I Short-run aggregate supply curve (SRAS): A curve showing the relationship in the short run between the PL and the quantity of real GDP supplied by rms. I Fluctuations in real GDP and the PL are caused by shifts in the AD curve or the AS curve.
A Sneak Peek at the Model In the short run, real GDP and the price level are determined by the intersection of the aggregate demand (AD) curve Aggregate demand (AD) curve: A curve that shows the relationship between the price level and the quantity of real GDP demanded by households, firms, and the government. Figure 13.1 and the short-run aggregate supply (AS) curve. Aggregate demand and aggregate supply Short-run aggregate supply (AS) curve: A curve that shows the relationship in the short run between the price level and the quantity of real GDP supplied by firms. 4 of 51
Why Is the Aggregate Demand Curve Downward Sloping? I Because a fall in the PL increases the quantity of real GDP demanded. Y = C + I + G + NX (1) I The wealth e ect: How a change in the PL a ects consumption? I I I Some of a household s wealth is held in cash or other nominal assets that lose value as the price level rises and gain value as the PL falls. As the PL falls, the real value of HH wealth rises, and so will consumption because consumption is positively correlated with real wealth. This e ect of the PL on consumption is called the wealth e ect.
I (Conti.) The interest rate e ect: How a change in the PL a ects investment? I I When prices rise, HHs and rms need more money to nance buying and selling; consequently, they try to increase the amount of money they hold by withdrawing funds from banks, borrowing from banks, or selling bonds. These actions will increase the interest rate (IR) charged on loans and bonds. A higher IR raises the cost of borrowing for rms and HHs (e.g., borrow less to build new buildings, new houses, or autos). Investment and consumption will therefore be reduced.
I (Conti.) The international-trade e ect: How a change in the PL a ects net exports? I I If the PL in the US rises relative to the PLs in other countries, US exports will become relatively more expensive and foreign imports will become relatively less expensive. Consequently, some consumers in foreign countries will shift from buying US products to buying domestic products, and some US consumers will also shift from buying US products to buying imported products, US exports will fall and US imports will rise, causing NXs to fall.
Shifts of the AD Curve versus Movements Along It I Note that the AD curve tells the relationship bw the PL and the quantity of real GDP demanded, holding everything else constant. I If the PL changes, but other variables that a ect the willingness of HHs, rms, and gov. to spend are unchanged, the economy will move up or down a stationary AD curve. I If any variable changes other than the PL, the AD curve will shift. E.g., if gov spending increases and the PL remains unchanged, the AD curve will shift to the right at every PL.
Three Variables That Shift the AD Curve I Changes in government policies (Monetary and scal policies) I I I I I Monetary policy (MP): The actions the Federal Reserve takes to manage the money supply and interest rates to pursue macroeconomic policy objectives. Fiscal policy (FP): Changes in federal taxes and purchases that are intended to achieve macroeconomic policy objectives. Gov uses monetary and scal policies to shift the AD curve. Lower IRs lower the cost to rms and HHs of borrowing. Lower borrowing costs increase consumption and investment, which shifts the AD to the right. An increase in gov. purchases also shifts the AD to the right because they are one component of AD. An increase in personal income taxes reduce consumption spending and shift the AD curve to the left. Increases in business taxes reduce the pro tability and shift the AD to the left.
I (Conti.) Changes in the expectations of households and rms I I If HHs and rms become more optimistic (pessimistic) about their future incomes, they are likely to increase (reduce) their current consumption spending, which will increase (reduce) AD. Similarly, if rms become more optimistic (pessimistic) about their future pro tability of investment spending, the AD curve will shift to the right. I Changes in foreign variables: If rms and HHs in other countries buy fewer U.S. goods or if rms and households in the U.S. buy more foreign goods, net exports will fall, and the AD curve will shift to the left. I I I If real GDP in the US increases faster than the real GDP in other countries, US imports will increase faster than US exports, and NXs will decline. If the exchange rate bw. the dollar and foreign currencies rises, NXs will also fall. Both changes will shift the AD curve to the left.
I (Conti.) If the exchange rate between the dollar and foreign currencies rises, NXs will fall because the price in foreign currency of U.S. products sold in other countries will rise, and the dollar price of foreign products sold in the U.S. will fall. I NXs will increase if the value of the dollar falls against other currencies. I An increase in NXs at every price level will shift the AD curve to the right. I A change in NXs that results from a change in the price level in the U.S. will result in a movement along the AD curve, not a shift of the AD curve.
Shifts of the AD Curve vs. Movements along It The aggregate demand curve shows the relationship between the price level and real GDP demanded, holding everything else constant. A change in the price level not caused by a component of real GDP changing results in a movement along the AD curve. A change in some component of aggregate demand, on the other hand, will shift the AD curve. 8 of 51
AD shifts: Changes in Monetary Policy A government policy change could shift aggregate demand. There are two categories of government policies here: 1. Monetary policy: The actions the Federal Reserve takes to manage the money supply and interest rates to pursue macroeconomic policy objectives. If the Federal Reserve causes interest rates to rise, investment spending will fall; if it causes interest rates to fall, investment spending will rise. shifts the aggregate An increase in demand curve because Table 13.1 Variables that shift the aggregate demand curve 9 of 51
AD shifts: Changes in Fiscal Policy 2. Fiscal policy: Changes in federal taxes and purchases that are intended to achieve macroeconomic policy objectives. Increasing or decreasing taxes affects disposable income, and hence consumption. The government can also alter its level of government purchases. shifts the aggregate An increase in demand curve because Table 13.1 Variables that shift the aggregate demand curve 10 of 51
AD Shifts: Changes in Expectations Households or firms could become more optimistic about the future, increasing consumption or investment respectively. Of course, the opposite could also occur. shifts the aggregate An increase in demand curve because Table 13.1 Variables that shift the aggregate demand curve 11 of 51
AD Shifts: Changes in Foreign Variables If foreign incomes rise more slowly than ours, their imports of our goods fall; if ours rise more slowly, our imports fall. If our exchange rate (the value of the $US) rises, our exports become more expensive, so foreigners buy less of them (and we buy more imports, also). shifts the aggregate An increase in demand curve because Table 13.1 Variables that shift the aggregate demand curve 12 of 51
Making the Connection Recessions and the Components of AD part 1 We can understand the 2007-2009 recession better by examining what happened to the components of real GDP. (The red bar indicates the period of the recession, per the NBER). Consumption spending fell, relative to potential GDP during the recession. This was unusual: consumption usually stays steady during a recession. Consumption also stayed low in the four post-recession years. 13 of 51
Making the Connection Recessions and the Components of AD part 2 Residential investment had been falling before the recession, and continued to fall during it. Spending on residential investment has continued to be below the prerecession boom levels. 14 of 51
Making the Connection Recessions and the Components of AD part 3 Net exports increased (became less negative) just before and during the recession. This was in part due to the falling value of the $US. After the recession, net exports started to decrease once more, but then have stayed relatively steady. Loose monetary policy has kept the value of the $US down. 15 of 51
The Long-Run Aggregate Supply Curve I The e ect of change in the PL on aggregate supply (i.e., the quantity of GS that rms are willing and able to supply) is very di erent in the short run (SR) than in the long run (LR), so we need two AS curves: one for SR and one for LR. I Long-run aggregate supply (LRAS) A curve showing the relationship in the long run between the PL and the quantity of real GDP supplied. I In the LR the level of real GDP is determined by the number of workers, the capital stock, and the technology. I In the LR changes in the PL doesn t a ect real GDP because it doesn t a ect the number of workers, the capital stock, and technology. I Note that the level of real GDP in the LR is called potential GDP or full employment GDP. There is no reason for this normal level of capacity to change just because the PL has changed.
Long-Run Aggregate Supply Curve In the long run, the level of real GDP is determined by the number of workers, the level of technology, and the capital stock (factories, machinery, etc.). None of these elements are affected by the price level. So the long-run aggregate supply curve does not depend on the price level; it is a vertical line, at the level of potential or fullemployment GDP. Figure 13.2 The long-run aggregate supply curve 18 of 51
The Short-Run Aggregate Supply Curve I The SRAS is upward sloping because over the SR, as the PL increases, the quantity of G&S rms are willing to supply will increase. As prices of nal G&S rise, prices of inputs (such as the wages or the prices of natural resources) rise more slowly. I The reason for this is that some rms and workers fail to accurately predict changes in the price level. I Pro ts rise when the prices of the G&S rms sell rise more rapidly than the prices they pay for inputs. Therefore, a higher PL leads to higher pro ts and increases the willingness of rms to supply more G&S. I As the PL rises or falls, some rms are slow to adjust their prices. A rm that is slow to raise (reduce) its prices when the PL is increasing (decreasing) may nd its sales increasing (falling) and therefore will increase (decrease) production.
I (Conti.) Next questions are: I I Why some rms adjust prices more slowly than others? Why might the wages and the prices of other inputs change more slowly than the prices of nal G&S? I Most economists believe the explanation is that some rms and workers fail to predict accurately changes in the PL. The three most common reasons: 1. Contracts make some wages and prices sticky : Prices and wages are said to be sticky when they don t respond quickly to changes in demand or supply. Consider the Ford Motor company case. Suppose their managers negotiate a 3-year contract with the Labor union. Suppose that after the contract is signed, the demand starts to increase rapidly and prices rise. Producing more is pro table because they can increase prices and wages are xed by contract.
I (Conti.) The three most common reasons: 2. Firms are often slow to adjust wages. Many nonunion workers also have their wages adjusted only once a year. If rms adjust wages only slowly, a rise in the PL will increase the pro tability of hiring more workers and producing more output, and a fall in the price level will decrease the pro tability of hiring more workers and producing more output. 3. Menu costs (The costs to rms of changing prices) make some prices sticky. Firms base their prices today partly on what they expect future prices to be. Consider the e ect of an unexpected increase in the PL. Firms will want to increase the prices they charge. However, some rms may not be willing to increase prices because of MCs. Because of their relatively low prices, these rms will nd their sales increasing, which cause them to increase output.
Making the Connection How Sticky Are Wages? There is disagreement among economists about how sticky wages and prices actually are. To examine this, it is best to look at individual worker-level data. Some recent studies have done this, finding firms are reluctant to cut workers (nominal) wages. Instead, they: Offer lower salaries to new hires Fire current workers Decreases raises or freeze pay The graph shows the percentage of workers with no wage change in a given year. 21 of 51
Shifts of the SR-AS Curve vs. Movements Along It I The SR-AS curve is the SR relationship bw the PL and the quantity supplied, holding constant all other variables that a ect the willingness of rms to supply G&S. I If the PL changes but other variables are unchanged, the economy will move up or down a stationary AS curve. I If any variable other than the PL changes, the AS curve will shift.
Variables That Shift the SR-AS Curve I Increases in the labor force and in the capital stock. As the LF and the capital stock grow, rms will supply more output at every PL, and the SR-AS curve will shift to the right. I Technological change. As TC takes place, the productivity of capital and labor increases, which means that rms can produce more G&S with the same amount of labor and capital. Firms are then willing to produce more at every PL and AS shifts to the right. I Expected changes in the future price level. If workers and rms expect the PL to increase by a certain percentage, the SR-AS curve will shift by an equivalent amount, holding constant all other variables that a ect the SR-AS curve.
I (Conti.) Adjustments of workers and rms to errors in past expectations about PL. I I They sometimes make wrong predictions about the PL, so they will attempt to compensate for these errors. If increases in the PL turn out to be unexpected high, the union will take this into account when negotiating the next contract. The higher wages under the new contract will increase the company s costs and result in the company s needing to receive higher prices to produce the same quantity. I Unexpected changes in the price of an important natural resource. I I They can cause rms costs to be di erent from what they had expected. E.g., Oil prices. If oil prices rise unexpectedly, rms will face rising costs and thus only supply the same level of product at higher prices, and the SR-AS curve will shift to the left. I Supply shock An unexpected event that causes the SR-AS curve to shift.
Shifts of the SRAS Curve vs. Movements along It The short-run aggregate supply curve describes the relationship between the price level and the quantity of goods and services firms are willing to supply, holding constant all other variables that affect the willingness of firms to supply goods and services. A change in the price level not caused by factors that would otherwise affect short-run aggregate supply results in a movement along a stationary SRAS curve. But some factors cause the SRAS curve to shift; we will consider them in turn. 22 of 51
SRAS Shifts: Factors of Production and Technology An increase in the availability of the factors of production, like labor and capital, allows more production at any price level. A decrease in the availability of these factors decreases SRAS. Improvements in technology allow productivity to improve, and hence the level of production at any given price level. shifts the short-run An increase aggregate in supply curve because Table 13.2 Variables that shift the shortrun aggregate supply curve 23 of 51
SRAS Shifts: Expected Future Prices If workers and firms believe the price level will rise by a certain amount, they will try to adjust their wages and prices accordingly. Widely-held expectations of future price-level increases are self-fulfilling. Figure 13.3 How expectations of the future price level affect the short-run aggregate supply curve shifts the short-run An increase aggregate in supply curve because Table 13.2 Variables that shift the shortrun aggregate supply curve 24 of 51
SRAS Shifts: Adjustments to Errors in Past Expectations Workers and firms sometimes make incorrect predictions about the price level. As time passes, they will attempt to compensate for these errors. Suppose everyone failed to predict an increase in the price level. Prices rise, therefore so does output. Then once firms and workers notice the rising prices, they update their expectations and increase their price demands, decreasing short-run aggregate supply. shifts the short-run An increase aggregate in supply curve because Table 13.2 Variables that shift the shortrun aggregate supply curve 25 of 51
SRAS Shifts: Unexpected Changes in Prices of Resources A supply shock is an unexpected event that causes the short-run aggregate supply curve to shift. Example: Oil prices increase suddenly. Firms immediately anticipate rising input prices, and as a consequence will only produce the same amount of output if their own prices rise. Unexpected input price increases decrease SRAS; unexpected input price decreases would shift SRAS to the right instead. shifts the short-run An increase aggregate in supply curve because Table 13.2 Variables that shift the shortrun aggregate supply curve 26 of 51
Recessions, Expansions, and Supply Shocks I Because the full analysis of the AD-AS model can be complicated, we begin with a simpli ed case, using two assumptions: 1. The economy has not been experiencing any in ation. The PL is currently 100, and workers and rms expect it to remain at 100 in the future. 2. The economy is not experiencing any long-run growth. Potential real GDP is $14.0 trillion and will remain at that level in the future. I Stag ation A combination of in ation and recession, usually resulting from a supply shock.
Long-Run Macroeconomic Equilibrium In the long run, we expect the economy to produce at the level of potential GDP i.e., the LRAS level. So the long-run macroeconomic equilibrium occurs when the AD and SRAS curves intersect at the LRAS level. Our next task is to explain why long-run macroeconomic equilibrium cannot occur at any other level of output. For simplicity, assume: 1. No inflation; the current and expected-future price level is 100. 2. No long-run growth; i.e. the LRAS curve is not moving. Figure 13.4 Long-run macroeconomic equilibrium 28 of 51
Long-Run Macroeconomic Equilibrium Suppose that interest rates rise. AD moves left because: Firms and households reduce their planned investments, decreasing aggregate demand. Workers lose their jobs, and firms experience decreases in sales. Workers become willing to accept lower wages, and firms expect lower prices for their output. So the SRAS curve moves to the right, with goods and services sold for lower prices, until we return to full-employment. Figure 13.5 The short-run and long-run effects of a decrease in aggregate demand 29 of 51
Making the Connection Does It Matter What Causes AD to Fall? GDP has four components; an decrease in any of the four could cause a recession. Does it make any difference which component causes the recession? Most post-wwii recessions in the U.S. have been preceded by falls in residential construction. Recent research suggests that recessions caused by financial crises tend to be larger and more long-lasting than declines due to other factors. 30 of 51
Expansion Suppose that firms become more optimistic about the future. They increase their investment, shifting AD to the right. Unemployment falls below its natural rate, forcing employers to pay more; the increased demand for goods raises prices. Firms and workers raise their expectations about the price level, shifting SRAS to the left restoring long run equilibrium. Figure 13.6 The short-run and long-run effects of an increase in aggregate demand 31 of 51
Supply Shock In the previous analyses, AD moved suddenly. What if instead SRAS moved suddenly? We call this a supply shock. For example, suppose a sudden increase in oil prices shifts SRAS to the left. This causes stagflation, a combination of inflation and recession, usually resulting from a supply shock. Figure 13.7a The short-run and long-run effects of a supply shock: (a) A recession with a rising price level the short-run effect of a supply shock 32 of 51
Adjustment back to Potential GDP from a Supply Shock With the lower level of output, people are unemployed and products go unsold. Workers accept a lower wage, and firms decrease prices in order to clear inventories. With the decrease in expectations about prices, SRAS moves to the right, restoring longrun equilibrium. Figure 13.7b The short-run and long-run effects of a supply shock: (b) adjustment back to potential GDP the long run effect of a supply shock 33 of 51
How Long Does Adjustment to Long-Run Equilibrium Take? How long does it take to restore full employment? It depends on the severity of the supply shock, but it is likely to take several years. An alternative to waiting this long is to use fiscal or monetary policy to increase aggregate demand. This will result in permanently higher prices but may be worth the cost. Figure 13.7b The short-run and long-run effects of a supply shock: (b) adjustment back to potential GDP the long run effect of a supply shock 34 of 51
Making the Connection Forecasts for Returning to Potential GDP After the 2007-2009 recession, different groups estimated how long it would take to return to potential GDP. In 2011, the White House and the Congressional Budget Office estimated that we would return to full employment by 2016. The Federal Reserve disagreed, believing it would take even longer. For comparison, the second worst post-depression recession was in 1981-1982; recovery then took less than three years. 35 of 51
Making the Connection Forecasts for Returning to Potential GDP How accurate were these forecasts? It turns out, they were too optimistic. Economists still disagree about why the U.S. economy was taking so long to return to potential GDP; we will discuss this in later chapters. 2011 Estimates of 2013 Output Gap Actual Output Gap White House 3.8% CBO 2.7% Federal Reserve 2.1% 5.4% 36 of 51
A Dynamic AD-AS Model I The basic AD-AS model just discussed gives some misleading results: I It incorrectly predicts that a recession caused by the AD curve shifting to the left will cause the PL to fall, which has not happened for an entire year since the 1930s. I The problem arises from the two assumptions: 1. no continuing in ation 2. no long-run growth. I In the dynamic setting, we assume potential real GDP grows over time and in ation continues every year.
I (Conti.) We can then create a dynamic AD-AS model by making three changes to the basic model. 1. Potential real GDP increases continually, shifting the long-run AS curve to the right. I If assuming that no other variables that a ect the SR-AS curve have changed, the LR-AS and SR-AS curves will shift to the right by the same amount. Note that SR-AS is also a ected by other factors. 2. During most years, the AD curve will be shifting to the right. I As population grows and income grows, consumption, investment, and gov spending will increase over time. The AD curve will shift to the right. The AD curve shifting to the left will push the economy into recession.
I 3 (cont.) Except during periods when workers and rms expect high rates of in ation, the short-run AS curve will be shifting to the right. I I The dynamic model provides a more accurate explanation of the source of most in ation. In Figure 13.9, the SR-AS curve shifts to the right by less than the LR-AS because the anticipated increase in prices o sets some of the TC and increases in the LF and capital stock. Although in ation is generally a result of total spending growing faster than total production, a shift to the left of SR-AS can also cause an increase in the PL, just like the supply shock.
Dynamic AD and AS Model Figure 13.8 A dynamic aggregate demand and aggregate supply model 39 of 51
What Is the Usual Cause of Inflation? The usual cause of inflation is total spending increasing faster than production. AD moves further right than does LRAS. SRAS moves to the right; but the anticipated rise in the price level causes it to move less far than LRAS. Long run equilibrium is restored but with a higher price level. Figure 13.9 Using dynamic aggregate demand and aggregate supply to understand inflation 40 of 51
The Recession of 2007-2009 Three main factors combined to cause the recession: The end of the housing bubble House prices rose in the early 2000s initially due to low interest rates, but then due to speculation. In 2006, the speculative bubble began to deflate, and the spending on residential investment fell. The financial crisis As many people defaulted on their mortgages, many financial institutions took heavy losses. This financial crisis led to a credit crunch, decreasing consumption and investment spending. The rapid increase in oil prices during 2008 Several factors combined to increase the price of oil from $34 per barrel in 2004 to $140 per barrel in mid-2008. This supply shock exacerbated the ongoing recession. 41 of 51
The Recession of 2007-2009 in the Dynamic Model In 2007, the economy was more or less in long-run equilibrium. As usual, potential GDP increased from 2007 to 2008. But aggregate demand did not keep pace (housing bubble, financial crisis). At the same time, increasing oil prices shifted short-run aggregate supply to the left. The result: higher prices and below-potential real GDP. Figure 13.10 The beginning of the recession of 2007-2009 42 of 51
Macroeconomics Schools of Thought Macroeconomic theory is relatively less settled than microeconomic theory. Macroeconomics developed as a separate field within economics after the Great Depression. John Maynard Keynes book The General Theory of Employment, Interest, and Money inspires the model we have addressed in this chapter. It also inspired the Keynesian revolution: the name given to the widespread acceptance during the 1930s and 1940s of John Maynard Keynes macroeconomic model. Modern followers of Keynes refer to themselves as new Keynesians, and emphasize the stickiness of wages and prices in explaining fluctuations in real GDP a concept which Keynes did not include in his original model. 45 of 51
Other Schools of Thought #1: Monetarism Monetarism refers to the macroeconomic theories of Milton Friedman and his followers, particularly the idea that the quantity of money should be increased at a constant rate. Friedman argued in the 1940s that most fluctuations in real output were caused by fluctuations in the money supply. Therefore, the Federal Reserve should concentrate less on interest rates, and more on following a monetary growth rule, a plan for increasing the quantity of money at a fixed rate that does not respond to changes in economic conditions. Monetarism is based on the quantity theory of money, which we will examine in the next chapter. 46 of 51
Other Schools of Thought #2: New Classical Economics New Classical macroeconomics emerged in the 1970s; it consists of the macroeconomic theories of Robert Lucas and others, particularly the idea that workers and firms have rational expectations. In the New Classical school of thought, workers and firms develop expectations about price levels. If these expectations are wrong, then the real wage will be too high or too low, causing firms to reduce or increase employment respectively recession or expansion. New Classical economists believe these fluctuations can be minimized by helping workers and firms to form correct expectations again, a consistent monetary growth rule. 47 of 51
Other Schools of Thought #3: Real Business Cycle Theory The Real business cycle model of the economy focuses on real, rather than monetary, causes of the business cycle. Adherents to this model also believe that workers and firms form rational expectations about prices and wages, which adjust quickly to supply and demand. But they argue that the main sources of fluctuations in real GDP are temporary productivity shocks. They maintain that aggregate supply is vertical even in the short run and unaffected by the price level. It is supply shocks that affect the level of real output. 48 of 51
Other Schools of Thought #4: The Austrian School The Austrian school of economics: Began in the late 19 th century with the writings of Carl Menger Was advanced by Ludwig von Mises, and Friedrich von Hayek The Austrian school argues for the superiority of the market system over economic planning. Hayek particularly argued that only the price system could make use of all of the dispersed information to achieve efficiency. He also developed a theory of the business cycle wherein central bank-induced low interest rates cause the business cycle, by prompting overinvestment. Austrians argue the 2007-2009 recession fits this model the Fed cut interest rates too low in fighting the 2001 recession, they claim. 49 of 51
Which School of Thought Is Correct? To date, we do not know which school of thought is correct about the economy. Many pieces of evidence can be interpreted in several different ways. Economists cannot isolate particular elements to study and conduct controlled experiments. So it is likely that debate about the applicability of schools of thought, and optimal policies for governments to pursue, will continue for the foreseeable future. 50 of 51