The interaction of aggregate demand and supply (OCR A-Level Economics): Flashcards
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Aggregate Demand (AD) definition
Aggregate Demand (AD) definition
Total quantity of goods & services demanded in an economy
AD formula
AD formula
in AD equation
in AD equation
Consumption
in AD equation
in AD equation
Investment
in AD equation
in AD equation
Government spending
in AD equation
in AD equation
Net exports (exports minus imports)
Aggregate Supply (AS) definition
Aggregate Supply (AS) definition
Total output firms willing & able to produce at given price level
Shape of SRAS curve
Shape of SRAS curve
Upward sloping
Shape of LRAS curve
Shape of LRAS curve
Vertical
Why is LRAS vertical?
Why is LRAS vertical?
Output determined by resources, tech & institutions, not price
What does AD & AS interaction determine?
What does AD & AS interaction determine?
Equilibrium price level and output
Where is short-run equilibrium?
Where is short-run equilibrium?
Where AD intersects SRAS
Where is long-run equilibrium?
Where is long-run equilibrium?
Where AD intersects LRAS