Explain why the Aggregate Supply curve becomes increasingly steeply sloped at levels of RGDP near "full employment" and becomes especially steeply sloped beyond "full employment" RGDP
The short-run aggregate supply curve depends on the money wages in the economy. Once it crosses the full employment equilibrium the money wage rises very steeply, and hence the SAS rises very steeply.
One way to look at it is this. There ...
Solution Summary
The problem illustrates how the SAS behaves in a typical economy and why does the SAS curve slope so steeply up once it crosses the LAS curve, or the potential output. It explains the behavior of wages and other prices as the economy produces beyond its potential.
...supply represents the behavior of producers ... There are two aggregate supply curves because producers ... Since a given short-run aggregate supply curve assumes that ...
... terms of imputed utility-maximizing behavior under economic ... In the short run, there is a positive relationship ... sloping curve in both the long and short runs. ...
... eventually we expect (Points: 1) short-run aggregate supply to increase ... the price level to increase aggregate demand to ... 1) predicts the average behavior of a ...
... _____ aggregate demand and in the short run____ real ... no real change in wealth in the long run. Furthermore consumption behavior is also unchanged by deficits ...
... taxpayers to banks, since it can't alter their behavior. ... to external shocks in the short and long runs. ... for goods are flexible in the short run, while money ...
... in the money supply will cause in the short run a(n ... a. seized all the currency in circulation b. ran out of ... The behavior of the M1 velocity of money in recent ...
... q = 50 - 5p (a) Determine the short-run supply curve for the ... Assuming that the supply behavior of the competitive ... a) What is the aggregate supply curve for the ...
... The aggregate demand curve (AD) describes the behavior of buyers of final ... Demand tends to be more elastic in the long run rather than in the short run. ...
... the following changes, what are the short-run effects on ... equilibrium; assume also that for a short period, firms ... b) How is the procyclical behavior of average ...
