Explain how the aggregate demand and aggregate supply model can be made more dynamic

What will be an ideal response?


We can make the aggregate demand and aggregate supply model dynamic rather than static by making three changes to the basic model. First, potential real GDP increases continually because the long-run aggregate supply curve continually shifts to the right. This is because workers are continually entering the labor force, technological change occurs, and the economy accumulates machinery and tools. Second, aggregate demand increases during most years. This is because population and income increases over time. Finally, the short-run aggregate supply curve shifts to the right, except for periods of time when workers and firms expect high rates of inflation.

Economics

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Which of the following is a correct reason for stating that the United States has a fiduciary monetary system? I. Our money is convertible to a fixed amount of silver or gold. II. Our money has a predictable value

A) I only B) II only C) Both I and II D) Neither I nor II

Economics

Explain the purpose of payroll taxes. Is it a proportional form of tax?

What will be an ideal response?

Economics

When paired with investment, research and development is likely to ______.

a. improve productivity and economic growth b. lower the standard of living c. curtail labor productivity and growth d. reduce the importance of physical capital

Economics

An assumption underlying indifference curve analysis is that MUx/MUy ________ as less of X and more of Y is consumed.

A. decreases B. remains constant C. always equals one D. increases

Economics