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2. If the economy is self-regulating, how do changes in aggregate demand affect the economy in the long run?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter24: The Aggregate Demand/aggregate Supply Model

Section: Chapter Questions

Problem 15SCQ: If the economy is operating In the Keynesian zone of the SRAS curve and aggregate demand falls, what...

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In your view, is the economy currently operating in the Keynesian, intermediate or neoclassical portion of the economys aggregate supply curve?
Name some government policies that cod cause aggregate demand to shift.
Explain why the short-run aggregate supply curve might be fairly flat in the Keynesian zone of the SRAS curve. How might we tell if we are In the Keynesian zone of the AS?
Name some economic events not related to government policy that could cause aggregate demand to shift.
From a Keynesian point of view, which is more likely to cause a recession: aggregate demand or aggregate supply, and why?
Explain why the short-run aggregate supply curve might be vertical in the neoclassical zone of the SRAS curve. How might we tell if we are in the neoclassical zone of the AS?
If the economy is operating In the Keynesian zone of the SRAS curve and aggregate demand falls, what is likely to happen to real GDP?