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When wages are raised by the firms shortrun aggregate supply curve will shift upward and this process of shifting shortrun aggregate supply curve upward will continue until it reaches SAS 1 which cuts the new aggregate demand curve AD 1 at point E 2 that lies at the longrun supply curve LAS and as a result price level further rises to P 2.
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The additional shifts in aggregate demand that result when expansionary fiscal policy increase income and thereby increasing consumer spending is explained by 1. Multiplier effect 2. Accelerator effect 3. Crowdingout effect 4. Crowding in effect Short run aggregate supply curve of Keynes is 1. Vertical 2. Horizontal 3. Upward sloping from
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Dec 07, 2019 ·Ń. Give the meaning of Aggregate Supply. (Foreign 2014) or Define Aggregate Supply. (All India 2009,2008) Ans. Aggregate Supply is the money value of the final goods and services or national product produced in an economy during one year. It is equal to income generated. 4. Define Marginal Propensity to Consume. (Delhi 2014 All India 2009) Ans.
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Shortrun fluctuations may also be related to monetary factors, but changes in aggregate demand and aggregate supply can also influence price level. For example, a decrease in demand due to a recession can lead to lower price levels and deflation. A negative supply shock, such as an oil crisis, lowers aggregate supply and can cause inflation.
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Shortrun fluctuations may also be related to monetary factors, but changes in aggregate demand and aggregate supply can also influence price level. For example, a decrease in demand due to a recession can lead to lower price levels and deflation. A negative supply shock, such as an oil crisis, lowers aggregate supply and can cause inflation.
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Aggregate supply represents the quantity supplied of all products in a certain country or area at different price levels. A typical aggregate supply curve is upward sloping, just like one product''s supply curve. It slopes upward because of the substitution effect and because of the income effect.
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