Gdp price level, Microeconomics

GDP Price Level

At the equilibrium level of income aggregate spending in the economy equals aggregate output. All along, we have assumed that the general price level remains unchanged. We need to give up this assumption and establish relationship between real GDP and the general price level.

The general price is determined by the intersection of the aggregate demand curve and the aggregate supply curve.

Aggregate demand curve shows, for each price level, the associated level of GDP for which aggregate desired spending equals total output, and is consistent with the level of income generated at the output.

Aggregate supply curve relates the quantity of output supplied to the price level. Short-run aggregate supply curve (SRAS)shows the quantity of output that firms would like to produce and to sell at each price level on the assumption that the prices of all inputs remain constant. The long-run aggregate supply curve (LRAS) plots the desired quantity of output that firms would like to produce after the price level and input prices have fully adjusted to any demand shock.

Posted Date: 6/11/2013 7:39:28 AM | Location : United States







Related Discussions:- Gdp price level, Assignment Help, Ask Question on Gdp price level, Get Answer, Expert's Help, Gdp price level Discussions

Write discussion on Gdp price level
Your posts are moderated
Related Questions
PRICE ADJUSTMENTS UNDER FIXED EXCHANGE RATE: In a flexible exchange rate regime trade deficits (surpluses) are automatically corrected by a depreciation (appreciation) of a co

Would a risk loving person prefer an increase in the chance of winning the lottery by 20% or an increase in the jackpot of 20%

Show that when a plane wave is transmitted through a thin lens of focal length f in the direction parallel to the optical axis of the lens, its converted into a paraboloid wave (th

discuss scarcity,choice and opportunity cost

Is Indian companies running a risk by not giving attention to cost cutting

Current Cropping Pattern: It is evident from these data that foodgrains constitute the most dominant  crop group that is cultivated in India. It is estimated that total croppe

Summary of Demand and Supply Considerations of Education A study of supply and demand considerations in education helps in understanding four major issues and concerns of an e

What is main difference between capital intensive goods and primary products?  Primary product means the major product in which the firm is dealing. Capital intensive good mea

In this part, use the results for market demand for short-run and long run market supply of good x1 obtained in parts one and two. When a change (e.g. income or taxes) is introduce

Hi, Can you help with writing journals homework? It should be in english as a second language. Ten pages different topics about Karl Marx economics views. I will give you the t