U16-Aggregate Supply and Aggregate Demand Barron's

the economy is always..

fluctuating

business cycles aren't necessarily

uniformly scheduled

long run aggregate supply measures

real output

the only things that affect LRAS are

change in tech and change in resources

prices do not affect what curve?

LRAS

why does price not affect LRAS?

because in the long run, real output always stays the same

what is the only thing that does not shift short run aggregate supply?

change in price of goods outputted

what shifts short run aggregate supply

change in expected future prices, change in price of inputs, change in tech, and change in resources

when prices go up, we move in what direction ALONG the aggregate demand curve?

left

why do we go left along the AD curve when prices go up?

because foreigners become less likely to buy and domestic buyers will favor imports

6 things that shift the ENTIRE AD curve

consumer confidence, business confidence, tax, government spending, foreigner spending habits, and money supply

why does money supply shift the ENTIRE AD curve?

money supply controls the expansion and contraction of the business cycle

stagflation is when

both unemployment and inflation rises at the same time

the only shift of a certain curve that can cause stagflation is

the shifting of the SRAS curve to the left

one thing that can cause SRAS curve to shift to the left is

increase in prices of anything that will make production more expensive

aggregate supply curve is not found by simply

simply adding up individual products demand curve horizontally or vertically

aggregate demand slopes down because as prices increase…

interest rate increases