Question
The economy can return to equilibrium balance in response to changes in aggregate demand and aggregate supply in both short run and long run if
The economy can return to equilibrium balance in response to changes in aggregate demand and aggregate supply in both short run and long run if some of these things listed happens. When it comes to the aggregate demand it can increase both long and short run by people's expectation in price inflations that have not happened yet. If the consumer believes something will rise over time, they will start purchasing things now because they expect the price level to be above the price it is now.Another thing that can cause the AD to return to equilibrium is if the people trust the economy and spend, spend, spend. That takes in account that the people trust their future revenues.
When it comes to the Aggregate supply in the short run if the producers of products expect to see a lower price for their goods or items. The producers will sell things as is, while the price level is still high.Another thing is if the resources for they need to produce items decrease in price temporarily , they will be able to make more production causing an increase.When it comes to long run in aggregate supply new tech is always in advancement to increase the aggregate supply. Especially when that new tech can help speed up or smarten the production capabilities. Speeding up and smartening production capabilities help move units at a rapid pace.
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