Sub part (a): Explanation The supply is dependent upon the price level in the economy. When the price level is higher, the suppliers will be receiving higher income, and this would incentivize them to increase the supply in the economy and vice versa. The aggregation of the supply curves of all the firms in the economy is known as the aggregate supply curve . In the short run period, the aggregate supply curve represents the relationship between the price level in the economy and the supply by the firms. The demand comes from all the economic agents such as the households, firms, as well as the government. The demand is depended on the price level of the economy. The increase and decrease in the price level determine the level of demand in the economy. The aggregation of all the individual demands in the economy is known as the aggregate demand; thus, the aggregate demand explains the relationship between the general price level and the level of real GDP demanded in the economy by the economic agents such as the households, firms, and the government... Sub part (b): To determine The impact of various economic activities on the AD and AS curves. Sub part (c): To determine The impact of various economic activities on the AD and AS curves.

The impact of various economic activities on the AD and AS curves.

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN: 9781337091985

Author: N. Gregory Mankiw

Publisher: Cengage Learning

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Question

Chapter 15, Problem 8PA

Sub part (a):

To determine