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What are some of the factors that would shift the aggregate demand and supply curves. Given your answer, how would an increase in consumer wealth affect the overall US economy using the AS/AD model?

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Darryn D'Souza
Darryn D'SouzaLv10
28 Sep 2019

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Related questions

The aggregate supply (AS) and aggregate demand (AD) model describe the condition of the overall economy; this model is used to predict changes in the price level and output from external shocks to the economy and various government policies.

Please describe what the aggregate supply and aggregate demand curves represent; explain what accounts for their shape (i.e., downward sloping AD and upward sloping AD); and give examples of at least two factors each that might result in a shift in AD and AS.

The AS/AD model is an excellent way to understand how specific policies and actions affect output and prices in an economy. Think about these questions as you discuss this topic:

What is the aggregate demand (AD) curve? What are the components of AD? What factors can shift the AD curve?

What is the difference between the long-run aggregate supply curve and the short-run aggregate supply curve?

What is MPC? How does the spending multiplier work?

Suppose a crash in the stock market reduces people's wealth. Using the model of aggregate demand and aggregate supply, identify the curves that are affected, and which way these curves would shift. Clearly explain the new equilibrium.

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