2.4 Macroeconomic Equilibrium Flashcards

1
Q

What is short run equilibrium

A

Occurs when SRAS is equal to AD

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2
Q

What does SRAS determine

A

GPL and real GDP

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3
Q

What does an increase in AD lead to

A

An expansion of SRAS leading to a higher equilibrium level of national output

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4
Q

What does an increase in SRAS lead to

A

An expansion of AD and a higher equilibrium level of national output

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5
Q

Define long run macroeconomic equilibrium

A

Long run macroeconomic equilibrium occurs when long run aggregate supply is equal to aggregate demand

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6
Q

For classical economists, what does an increase in AD cause

A

An increase in AD will be purely inflationary as the economy in the long run is operating at maximum potential output

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