Explore BrainMass

Explore BrainMass

    Aggregate supply-demand

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Please help with the following problem.

    You observe that output is above full-employment output. Politicians are arguing about the possible reasons. One party claims that this is due to a drop in world oil prices. The other party claims that this is due to an increase in consumer spending. Using aggregate supply-aggregate demand graphs, explain (a) how each of the above reasons could cause an increase in output, and (b) what evidence you could use to determine which one of these had occurred.

    © BrainMass Inc. brainmass.com December 24, 2021, 6:23 pm ad1c9bdddf
    https://brainmass.com/economics/aggregate-demand-and-supply/aggregate-supply-demand-110887

    Solution Preview

    Problem: You observe that output is above full-employment output. Politicians are arguing about the possible reasons. One party claims that this is due to a drop in world oil prices. The other party claims that this is due to an increase in consumer spending. Using aggregate supply-aggregate demand graphs, explain (a) how each of the above reasons could cause an increase in output, and (b) what evidence you could use to determine which ...

    Solution Summary

    In this solution, the aggregate supply-demand is examined.

    $2.49

    ADVERTISEMENT