Exercises
AS-AD Model
AS-AD Model
With an aid of AS-AD diagram, explain the effect on price level and output when the labour productivity increases in the long run.
Skills required: understand the effect of complex events and the adjustment, then apply it to the graph with logical explanations
Related concepts:
With an aid of AS-AD diagram, explain the effect on output when the government reduces the profits tax rate for corporations and raises subsidy for innovation and technology at the same time.
Skills required: understand the effect of complex events and the adjustment, then apply it to the graph with logical explanations
Related concepts:
Suppose the incentive to invest increases in the short run. With an aid of AS-AD diagram, suggests a demand-side factor to offset the effect on the price level. Explain.
Skills required: understand the effect of complex events and the adjustment, then apply it to the graph with logical explanations. Think about what would the government do (fiscal policy).
Suppose the government announces a tax reduction. With an aid of AS-AD diagram, suggests a demand-side factor to offset the effect on the price level. Explain.
Skills required: understand the effect of complex events and the adjustment, then apply it to the graph with logical explanations. Think about what would the government do (fiscal policy).