Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Q. Why GDP is determined only by aggregate demand?
Note that we haven't said anything about the aggregate supply so far. In order to justify why GDP is determined only by aggregate demand we have to explain why supply aggregate YS plays no role and why YS always would be exactly equal to YD (that is essential for the goods market to be in equilibrium).
We can explain why YS = Y* by analysing what would have happened if firms didn't supply this quantity.
1. Imagine that firms supplied and also produced a larger quantity so that Y > Y*.
2. From the figure above, YD< Y and firms can't sell everything they produce.
3. Unplanned stock investments will increase by Y - YD when companies are forced to put unsold products in stock.
4. Then firms will want to lower their supply. Reduction will continue until YS = Y*.
5. If, conversely they supply and produce too little, Y < Y* and then Yd> Y. Stocks will now be decreased and firms will want to increase the supply.
Please note that Keynesian model always presumes quantity adjustment to get back to equilibrium. There are no price adjustments in the Keynesian model.
what reasons limit the bargaining power of trade union in developing countries
Bruno's Lunch Counter is expanding and expects operating cash flows of $26,000 a year for 4 years as a result. This expansion requires $39,000 in new fixed assets. These assets wil
Why and how does free trade help the U.S. economy? How might free trade hurt the U.S. economy?
An owner can lease her building for $100,000 per year for the next three years. The explicit cost of maintaining the building is $35,000, and the implicit cost is $50,000. All reve
Macroeconomics usually deals with the behaviour of aggregates of economic variables. An economic variable is a magnitude whose value may changes. Important variables in macroeconom
what wil hapen to the real wage if the nominal wages and prices rise at the same rate per year?
Christina Romer and Jared Bernstein in "The Job Impact of the American Recovery and Reinvestment Plan" calibrated the impact of the proposed expansionary fiscal policy (we know it
Beverly enterprises owns a nursing home that is currently earning $2.0 million in cash flow on an annual basis, but this amount is expected to drop in the future. The nursing home
the circular flow of income in an governed economy
definition and charactoristics of index numbers.problems while constructing index numbers
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!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd