Question:
Explain what happens when AD increases with a Keynesian AS Curve
Author: eric_galvaoAnswer:
-AD Increasing can lead to Different outcomes, depending where the AD originally Started from. -If AD started when the LRAS was Perfectly Elastic, then an Increase means that Output Rises while Prices remains the Same. This suggests the Economic is in Depression -If AD started when the LRAS was Curving, then an Increase means both Output and Prices rise. Suggests the Economy is below Full Capacity -If AD Rises when its Perfectly Inelastic, only Price will Rise. This suggests the Economy is in Full Capacity.
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