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If aggregate demand rises what happens to real GDP what happens to the price level?
Wiki User
∙ 6y ago
Inflation.
Wiki User
∙ 13y ago
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Using the AD-AS framework what is the impact on equilibrium price and output when there are increase in aggregate demand and aggregate supply simultaneously?
AD-AS represents aggregate demand curve (AD) and aggregate supply curve (AS). "In the aggregate demand-aggregate supply model, each point on the aggregate demand curve is an outcome of the IS-LM model for aggregate demand Y based on a particular price level. Starting from one point on the aggregate demand curve, at a particular price level and a quantity of aggregate demand implied by the IS-LM model for that price level, if one considers a higher potential price level, in the IS-LM model the real money supply M/P will be lower and hence the LM curve will be shifted higher, leading to lower aggregate demand; hence at the higher price level the level of aggregate demand is lower, so the aggregate demand curve is negatively sloped
When aggregate supply exceeds aggregate demand what will happen to the price level?
The price will go down.
What happens going from left to right on the aggregate demand curve real GDP?
rises as price level falls
What will happen to the equilibrium price level and the real GDP if the aggregate demand decreases and aggregate supply decreases?
The equilibrium price level increases, but the real GDP change depends on how much aggregate demand and aggregate supply change by.
What would cause the aggregate demand curve to shift to the right?
The aggregate demand curve will shift to the right as the economy expands. When that happens, the quantity of output demanded for a given price level rises.
Using the AD-AS framework what is the impact on equilibrium price and output when there are increase in aggregate demand and aggregate supply simultaneously?
AD-AS represents aggregate demand curve (AD) and aggregate supply curve (AS). "In the aggregate demand-aggregate supply model, each point on the aggregate demand curve is an outcome of the IS-LM model for aggregate demand Y based on a particular price level. Starting from one point on the aggregate demand curve, at a particular price level and a quantity of aggregate demand implied by the IS-LM model for that price level, if one considers a higher potential price level, in the IS-LM model the real money supply M/P will be lower and hence the LM curve will be shifted higher, leading to lower aggregate demand; hence at the higher price level the level of aggregate demand is lower, so the aggregate demand curve is negatively sloped
When aggregate supply exceeds aggregate demand what will happen to the price level?
The price will go down.
What happens going from left to right on the aggregate demand curve real GDP?
rises as price level falls
Aggregate demand and Aggregate supply curve?
The aggregate demand curve show what consumers are willing to buy at a given price level, whereas the aggregate supply curve shows what producers are willing to produce at a given price level.
What will happen to the equilibrium price level and the real GDP if the aggregate demand increases and aggregate supply decreases?
The equilibrium price level increases, but the real GDP change depends on how much aggregate demand and aggregate supply change by.
What will happen to the equilibrium price level and the real GDP if the aggregate demand decreases and aggregate supply increases?
The equilibrium price level increases, but the real GDP change depends on how much aggregate demand and aggregate supply change by.
What will happen to the equilibrium price level and the real GDP if the aggregate demand decreases and aggregate supply decreases?
The equilibrium price level increases, but the real GDP change depends on how much aggregate demand and aggregate supply change by.
What would cause the aggregate demand curve to shift to the right?
The aggregate demand curve will shift to the right as the economy expands. When that happens, the quantity of output demanded for a given price level rises.
How would war affect aggregate demand and what happens to output and the price level?
As war is an unexpected factor that impedes the economic growth of a country, it leaves the aggregate demand with no option but a slope negatively downwards in dicating higher price levels.
Does a change in price level shift the aggregate demand curve?
Yes
Concern about an international crisis has caused consumers to save their money and postpone big purchases what is the effect on aggregate demand and supply?
aggregate demand will decrease, lowering both real GDP and the price level
What happens to the equilibrium price levels and real GDP when aggregate demand decreases and aggregate supply increases?
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