Consider the situation:
You need to answer the following questions:
?What has led to the country's increase in the long-run equilibrium price level and the change in the position of its aggregate demand schedule?
?What specific factors might have accounted for this event?
Explain by giving reasons.
In the AD-AS model if the AD curve shifts to the right this will cause a higher equilibrium price level. There are several things that can shift the AD curve. 1) expansionary monetary policy: if the Fed lowers rates then people spend more so consumption and ...
Long-Run Equilibrium Price Level is considered.