Why does the effect of a given increase in aggregate demand have a larger effect on real output in the short run, the more excess capacity exists in the economy?

Q: Explain why aggregate demand (AD) curve is negatively sloped by taking the link between the goods…

A: Goods market is a market where the trade of final services and commodities takes place. In this…

Q: Why long - run aggregate supply (AS) schedules are drawn vertically and short -run schedules are…

A: In an economy, aggregate supply curve is used to express the total supply of output by all the…

Q: What is the long run aggregate supply curve

A: An aggregate supply curve shows the relationship between the output produced in an economy and the…

Q: The following graph shows the economy in long-run equilibrium at the expected price level of 120 and…

A: Hi, Thank you for the question. We will answer the first three subparts as we can answer only 3…

Q: Discuss the various factors affect aggregate supply curve shift.

A: The aggregate supply curve is one of the most determinant of the determination of the output or the…

Q: LRAS SRAS, SRAS, R AD. AD, QUANTITY OF OUTPUT PRICE LEVEL

A: The long-run aggregate supply (LRAS) curve compares the amount of production provided by businesses…

Q: Explain  the factors that cause the Aggregate Demand curve to be downward sloping left to right.

A: The meaning of downward sloping demand curve is that when the price falls the aggregate demand…

Q: One of your classmates is convinced that the actual amount of output that corresponds to the…

A: The fixed LRAS corresponds to the the natural level of output, which the economy can produce at…

Q: Why is an economy not in equillibrium when aggregate demand is not equal to aggregate supply?

A: Aggregate demand (AD) is the sum total amount of commodities and services demanded in an economy at…

Q: Explain with example how a reduction in taxes without a reduction in government spending may have no…

A: The economies around the world tend to focus on their growth, stability in the financial, and…

Q: What happens to aggregate demand when transfer payments and the taxes to pay them both rise by the…

A:

Q: What causes the aggregate supply curve to have an upward slope in the short run, but a vertical…

A: Total supply of goods and services produced at a given price in a given period of time within an…

Q: The following graph shows the economy in long-run equilibrium at the expected price level of 120 and…

A: Change in aggregate demand due to decrease in investment spending:-

Q: The following graph shows the economy in long-run equilibrium at an expected price level of 120 and…

A: Investment tax credits:- Fundamentally, investment tax credits are a governmental tax incentive for…

Q: List the three reasons for why the aggregate-demand curve slopes downward. Explain Answer

A: At each price level, an aggregate demand curve depicts total spending on domestic goods and…

Q: What are three factors that help explain the slope of the aggregate demand curve? What is the most…

A: The slope of the Aggregate Demand curve is downward sloping. The three reasons include: 1-Pigou…

Q: what impact would a change that shift an economys production possibilities curve outward have on the…

A: Outward production possibility curve would increase efficiency.

Q: Explain why the Aggregate Demand curve is downward sloping

A: Aggregate demand curve is demand for finished products (goods and services) in an economy at a…

Q: What is the shape of the aggregate supply curve in the long run and in the short run? Explain the…

A: The AS {"aggregate supply"} is described as the total Q {"quantity"} of output that the firms will…

Q: Give three reasons why the aggregate demand curve slopes downward.

A: Answer - Reasons for AD curve to be sloping downward:- 1. Wealth effect:- According to this money…

Q: How does an increase in aggregate demand affect output, unemployment, and the price level in the…

A: AD(aggregate demand) curve, shifts to the right(increases) when its components rise. The components…

Q: Changes in short run aggregate supply can be caused by changes in? Explain?

A: The aggregate supply curve shows the relationship between the price level in the economy and the…

Q: What are the major factors that determine investment, and what impact does each have on aggregate…

A: Investment refers to the economic activity under which households and firms make an agreement or…

Q: aggregate supply

A: Out of the two, short term aggregate supply is more realistic and reflects the actual scenario of…

Q: What effects would  increase in aggregate supply have on price levels and GDP?

A: In economics, the aggregate supply level is a concept which measures the level of total output or…

Q: Along the long-run aggregate supply curve, the level of Real GDP supplied with increases in the…

A: The aggregate supply curve is an upward sloping curve that shows the relationship between the level…

Q: Graphically illustrate the long-run aggregate supply curve. Explain

A: In the long run, the aggregate supply curve is assumed to be vertical that is it does not change…

Q: Explain why the long-run aggregate-supply curve isvertical.

A: LONG RUN AGGREGATE SUPPLY CURVE - long-run is a period when all the factors of productions can be…