Long-Run Self-Adjustment
AP Macroeconomics · Flashcards · Application
AP MACROECONOMICS · FLASHCARDS
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QUESTION
Find the adjustment needed if the actual GDP is below potential GDP.
QUESTION
Find the result of long-run self-adjustment on real GDP after a demand shock.
QUESTION
Find the adjustment needed if the actual GDP is below potential GDP.
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ANSWER
Increase aggregate supply. Lower wages and costs will shift SRAS right toward potential GDP.
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