ECO ch 13
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total supply of all goods and services in an economy
aggregate supply (AS) curve
- graph that shows the relationship between the aggregate quantity of output supplied by all firms in an economy and the overall price level
- Is NOT a market supply curve
- really a "price/output response" curve
The capacity of a AS curve. At this point the curve is vertical.
Cost shock/Supply shock
Change in costs that shifts the short-run AS curve
Equilibrium price level
Price level at which the aggregate demand and aggregate supply curves intersect
Potential Output/Potential GDP
Level of aggregate output that can be sustained in the long-run without inflation
Monetary and Fiscal Policy Effects
Aggregate demand can shift to the right for a number of reasons, including an increase in the money supply, a tax cut, or a increase in govt spending
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