A country with a small Aggregate Demand shock (a shift to the right in the AD curve) may have a substantial economic boom in the short-run, but countries with massive increases in AD (eg. hyperinflation countries like Venezuela and Lebanon today, or Germany during the 1920s) don’t seem to experience economic growth. Why does a small AD increase raise GDP more than a giant AD increase? Explain your solution.
A country with a small Aggregate Demand shock (a shift to the right in the AD curve) may have a substantial economic boom in the short-run, but countries with massive increases in AD (eg. hyperinflation countries like Venezuela and Lebanon today, or Germany during the 1920s) don’t seem to experience economic growth. Why does a small AD increase raise GDP more than a giant AD increase? Explain your solution.
Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter10: Keynesian Macroeconomics And Economic Instability: A Critique Of The Self Regulating Economy
Section: Chapter Questions
Problem 20QP
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A country with a small Aggregate
may have a substantial economic boom in the short-run, but countries with massive
increases in AD (eg. hyperinflation countries like Venezuela and Lebanon today, or
Germany during the 1920s) don’t seem to experience
small AD increase raise
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