Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Starting off, we can use the AD/AS model to look at and examine long-run economic growth. In this process, many things affect this growth rate

Starting off, we can use the AD/AS model to look at and examine long-run economic growth. In this process, many things affect this growth rate including unemployment cycles (specifically, cyclical), inflation, and the unemployment rates that tend to happen naturally. In this specific example of the Great Recession, we are looking at a couple of things specifically, the GDP and the price levels. If we want to see productivity growth, we will have to see a rightward shift in the AS curve, representing the GDP. A rightward shift in this curve would show an increase in overall GDP. Changes in this curve would change the equilibrium by taking the curve further up or down on the AD curve. Ultimately, a leftward shift in the AS curve would increase the equilibrium price, while a rightward shift would cause a decrease in the equilibrium price. Productivity, overall, can be a very detrimental factor in the shifts of these curves. All the main economic factors of production- land, labor, capital, and entrepreneurship, can affect the shift in the AS curve, specifically. While you may not see them directly in this diagram, it is important to note that they are playing a big role

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Rethinking Macroeconomics

Authors: John F McDonald

2nd Edition

1000434699, 9781000434699

More Books

Students also viewed these Economics questions

Question

what is faraday cage

Answered: 1 week ago

Question

A greater tendency to create winwin situations.

Answered: 1 week ago

Question

Improving creative problem-solving ability.

Answered: 1 week ago