Aggregate supply and the as curve, Macroeconomics

Assignment Help:

Aggregate supply and the AS curve

The AS curve is the aggregate supply as a function of P. It is horizontal when thesupply is low and upward sloping when the supply is high.

From the relationship between L and P we can derive the relationship between YS and P as YS is concluded by L by the production function (the higher L, the higher the). 

693_Aggregate supply and the AS curve1.png

Figure: The relationship between YS and P

Between points A and B prices are constant and firms produce an amount exactly equal to aggregate demand. Here reversed Say's Law and IS-LM model apply. In this interval, AS-AD model is redundant. Between points B and C we have a positive relation between P and YS. Neither reversed Say's Law nor IS-LM model apply. 

It is, though, unreasonable to believe that there would be a 'sharp edge' in the relationship between L and P and between YS and P in real economy. Schedules are drawn this way to simplify the explanation. A more reasonable assumption would be that relationships are smooth curves.

1557_Aggregate supply and the AS curve.png

Figure: More realistic relationships between L and P and between YS and P


Related Discussions:- Aggregate supply and the as curve

What is national income, Q. What is national income? What are the different...

Q. What is national income? What are the different methods of measuring national income? National income is the aggregate money value of the annual flow of final goods and serv

What is the monopole and dipole moment, Charge is distributed with constan...

Charge is distributed with constant volume density D throughout the rectangular box with length a, width b and height c.  a) what is the monopole moment of this system. b) What i

Quiz, To overcome the stagnant growth it was experiencing for the past 10-1...

To overcome the stagnant growth it was experiencing for the past 10-15 years, Japan undertook which of the following measures? Answer Undertook programs to build infrastructure

World in the cross model, The rest of the world in the cross model ...

The rest of the world in the cross model Imports Im(Y) depends positively on Y in the cross model In the classical model, imports doesn't depen

Intermediate macroeconomics, An economy's IS and LM curves are given by the...

An economy's IS and LM curves are given by the following equations: with Y indicating output (income), c indicating the marginal propensity to consume, I investment, G gove

GDP and GNP, y explain whether you agree or disagree with the following sta...

y explain whether you agree or disagree with the following statements. “If nominal GDP is less than real GDP, then the price level must have fallen during the year.”

Probability of being dealt any two cards greater, 1) Suppose you are dealt ...

1) Suppose you are dealt two cards from a standard deck of playing cards. a) What is the probability of being dealt a pair of aces? b)There are 13 possible pairs possible (Ac

About assignment, i have assignment due within less than 24 hours if i sub...

i have assignment due within less than 24 hours if i submit assignment can i get it back before 24 hours?

Importance of macroeconomics models, Importance of macroeconomics models ...

Importance of macroeconomics models Using the models we can, for example, analyze what happens when the government increases consumption, when the central bank increases the tar

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd