Aggregate Demand/Aggregate Supply Reference an article about an economy (US or other) that suggests a shift...

Aggregate Demand/Aggregate Supply

Reference an article about an economy (US or other) that suggests a shift is occurring in Aggregate Demand or Aggregate Supply. Describe the nature and the causes of that shift and what the result of the shift is?

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Expert Solution

Aggregate demand plays the most important role in determining the employment. It is the price level which all firms or entrepreneurs in the economy actually expect to receive from sale of output produced. The diagram shows the shift in aggregate demand in order to attain full employment and what happens when it will increase demand after attaining the full employment.

The equilibrium level of national income is determined at point where aggregate supply intersects aggregate demand at point E. Output produce before E at Y1 was not producing at full employment and production above E at Y2 will increase the demand and will cause shift in aggregate demand to upward direction.

Aggregate supply price is the total amount of the money which all the entrepreneur in the economy taken together must expect to receive from sale of output.

Rahul Sunny answered 9 months ago

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