Effects Of Shifts In The Ad Curve And The As Curve On The Level Of Real Output, The Price Level And Employment
Economics notes
Effects Of Shifts In The Ad Curve And The As Curve On The Level Of Real Output, The Price Level And Employment
➡️ Equilibrium in the AD/AS model is established when the aggregate demand (AD) and aggregate supply (AS) curves intersect. This intersection determines the level of real output, the price level and employment in the economy.
➡️ The level of real output is determined by the intersection of the AD and AS curves, which is the point at which the quantity of goods and services demanded is equal to the quantity of goods and services supplied.
➡️ The price level is determined by the intersection of the AD and AS curves, which is the point at which the price of goods and services demanded is equal to the price of goods and services supplied. Employment is determined by the intersection of the AD and AS curves, which is the point at which the number of workers demanded is equal to the number of workers supplied.
How does a shift in the AD curve affect the level of real output?
A shift in the AD curve will cause a change in the level of real output. If the AD curve shifts to the right, it will lead to an increase in the level of real output, while if the AD curve shifts to the left, it will lead to a decrease in the level of real output.
How does a shift in the AS curve affect the price level?
A shift in the AS curve will cause a change in the price level. If the AS curve shifts to the right, it will lead to an increase in the price level, while if the AS curve shifts to the left, it will lead to a decrease in the price level.
How does a shift in the AD curve affect employment?
A shift in the AD curve will cause a change in employment. If the AD curve shifts to the right, it will lead to an increase in employment, while if the AD curve shifts to the left, it will lead to a decrease in employment.