Economics 15
- Created by: Gabrielle
- Created on: 30-12-13 13:03
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- Aggregate Demand and Supply
- Aggregate Demand
- Why the Aggregate Demand Curve Slopes Downward
- Fall in prices
- increase of goods demanded
- Consumption, Investment and Net exports increase
- Why the Aggregate Demand Curve Might Shift
- Consumption changes
- Investment changes
- Government purchases change
- More or less exports
- Why the Aggregate Demand Curve Slopes Downward
- Aggregate Supply
- Short Run
- Sloping upwards
- Normal wages are slow to adjust e.g. long term contracts
- Menu costs make some firms reluctant to increase prices frequently
- Some suppliers temporarily misread the reason for their price level changes
- Sloping upwards
- Long Run
- Quantity suppplied depends on supply of factors of production
- Shifts?
- More or less flexible labour markets
- Changes in capital stock
- State of natural resources
- Changes in technical knowledge
- Short Run
- Aggregate Demand
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