Aggregate Demand and Aggregate Supply, Firms' in Competitive Markets, Uncategorized
CRITERIA FOR CLASSIFICATION OF MARKET We have already given classification of markets. The following criteria for the classification of markets have been suggested: (I) Substitutability of Products This criterion refers to the’ existence and ‘closeness of...
Aggregate Demand and Aggregate Supply
PROBLEMS AND APPLICATIONS 1. Suppose that the economy IS in a long-run equilibrium. a. Draw a diagram to illustrate the state of the economy. Be sure to show aggregate demand, short run aggregate supply, and long run aggregate supply. b. Now suppose that a...
Aggregate Demand and Aggregate Supply
QUESTIONS FOR REVIEW 1. Name two macroeconomic variables that decline when the economy goes into a recession. Name one macroeconomic variable that rises during a recession. 2. Draw a diagram with aggregate demand, short-run aggregate supply, and long-run aggregate...
Aggregate Demand and Aggregate Supply
CONCLUSION This chapter has achieved two goals. First, we have discussed some of the important facts about short-run fluctuations in economic activity. Second, we: have introduced a basic model to explain those fluctuations, called the model of aggregate demand and...
Aggregate Demand and Aggregate Supply
CASE STUDY OIL AND THE ECONOMY Some of the largest economic fluctuations in the US. economy since 1970 have originated in the oil fields of the Middle East. Crude oil is a key input into the production of many goods and services, and much of the world’s oil...
Aggregate Demand and Aggregate Supply
THE EFFECTS OF A SHIFT IN AGGREGATE SUPPLY Imagine once again an economy in its long-run equilibrium. Now suppose that suddenly some firms experience an increase in their costs of production. For example, bad weather in farm states might destroy some crops, driving up...
