Right or wrong, Blanchard says, various familiar aggregate supply / demand models have proven " incredibly useful " in analyzing the effects of policy.
32.
The levels of output and the price level are determined by the intersection of the aggregate supply curve with the downward-sloping aggregate demand curve.
33.
Anyway, Monetarists and Keynesians would argue a lifetime about the form of the aggregate supply, so I wouldn't worry too much about a specific formulation.
34.
Since wages cannot readily adjust low enough for aggregate supply to shift outward and improve total output, the government must intervene to accomplish this result.
35.
Positive economic incentive effects from reduced marginal tax rates will push out the aggregate supply curve to more than absorb demand increases without raising prices.
36.
According to the aggregate demand-aggregate supply model, when aggregate demand increases, there is movement up along the aggregate supply curve, giving a higher level of prices.
37.
Factor prices increase if producing at a point beyond full employment output, shifting the short-run aggregate supply inwards so equilibrium occurs somewhere along full employment output.
38.
Namely, when real aggregate supply does constrain, inflation results because capital goods industries cannot meet new real demands for capital goods by entrepreneurs by increasing capacity.
39.
The price level relative to its expected level has a positive effect on aggregate supply because of firms'mistakes in production plans due to mis-predictions of prices.
40.
According to the aggregate demand-aggregate supply model, when aggregate demand increases, there is movement up along the aggregate supply curve, giving a higher level of prices.
