Short-run Macroequilibrium

Question 1

equilibrium

Answer 1

occurs when the supply curve and the demand curve cross, and everything that is produced is consumed

Question 2

short run macro equilibrium

Answer 2

differs from micro equilibrium in that it is a measure of everything produce (GDP or Real Output) and the average prices for everything consumed (average price levels)

Question 3

note

Answer 3

• improvements sin the quantity or quality of the factors of production can cause the equilibrium to shift to the right–we are able to produce more at lower price levels
• these improvements are often the result of innovations (research and development)

Question 4

SRMM is very similar to the standard model for markets. in what ways are these two models similar

Answer 4

• increase in demand causes an increase in both price and quantity
• increase in supply causes an increase in quantity and a decrease in price
• equilibrium price is set at the exact point

Question 5

different

Answer 5

axis point can change

Question 6

y

Answer 6

real output