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3 Cards in this Set
- Front
- Back
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What is meant by equilibrium in the macroeconomy? |
When AD equals AS |
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How do changes in AD affect macroeconomic performance? |
-If firms have less confidence or there is a recession, AD might shift inwards, causing price level to fall -If AD increases, the price level and level of national output both increase. -When there is insufficient AD, you get negative output gap which means there is unemployment |
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How do changes in AD affect macroeconomic performance?
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-If the economy becomes more productive, or if there is an increase in efficiency, supply will shift to the right and price level and national output increase -If AS shifts inwards, price increases and national output decreases. |
