Chapter 11: Q. 32 (page 292)
How is long-term growth illustrated in an AD/AS model?
Short Answer
In an AD/AS diagram, a progressive rightward shift of aggregate supply shows long-run economic growth due to productivity gains over time.
Chapter 11: Q. 32 (page 292)
How is long-term growth illustrated in an AD/AS model?
In an AD/AS diagram, a progressive rightward shift of aggregate supply shows long-run economic growth due to productivity gains over time.
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Get started for freeSuppose the level of structural unemployment increases. How would you illustrate the increase in structural unemployment in the AD/AS model? Hint: How does structural unemployment affect potential GDP?
If firms become more optimistic about the future of the economy and, at the same time, innovation in 3-D printing makes most workers more productive, what is the combined effect on output, employment, and the price-level?
What are the economic reasons why the AD curve slopes down?
The short run aggregate supply curve was constructed assuming that as the price of outputs increases, the price of inputs stays the same. How would an increase in the prices of important inputs, like energy, affect aggregate supply?
What is potential GDP?
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