Transcription of The Aggregate Supply - Aggregate Demand Model
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The Aggregate Supply - Aggregate Demand Model
1 Some versions of this Model use the price level instead of the inflation rate to make the modelmore consistent with its microeconomics counterpart. Using the inflation rate, as is done here, producesresults that are a little more 2 THE Aggregate Supply - Aggregate Demand MODELThe first formal macroeconomics Model introduced by the text is called the Aggregate Supply - Aggregate DemandModel, which will hereafter be referred to as the AS/AD Model . The AS/AD Model is useful for evaluating factors andconditions which effect the level of Real Gross Domestic Product (GDP adjusted for inflation) and the level of Model is an aggregation of the elementary microeconomic Supply -and- Demand Model discussed in the previouschapter.
multiplier in any introductory economic textbook. In the case of deficit spending, there may be some crowding out of private spending because of the impact in the finance markets. This is discussed in the next chapter. The list shown is not all-inclusive, but is certainly a good starting point. Some of the factors and their respective signs
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