Examples of events that will shift the aggregate demand curve to the right include exogenous increases in consumption, investment, and net exports, a decrease in the savings rate, an increase in the marginal propensity to consume, a decrease in the interest rate, and a decrease in the real exchange rate.
In the short-run, examples of events that shift the aggregate supply curve to the right include a decrease in wages, an increase in physical capital stock, or advancement of technology. The short-run curve shifts to the right the price level decreases and the GDP increases.
Growth and recession in the AD/AS model. We canexamine both long-term and short-term changes in gross domestic product, or GDP, using the AD/AS model. In anAD/AS diagram, long-run economic growth due to productivity increases over time is represented by a gradual rightward shift of aggregate supply.
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