Question

describe a real world example of something that has changed in the U.S. (or another country)...

describe a real world example of something that has changed in the U.S. (or another country) which led to the shifting of the country's AD curve or SRAS curve. Alternatively, you could suggest a hypothetical situation in which something could change in a country which would lead to a shifting of that country's AD or SRAS curve.
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Ans : Real world example which has caused a change in AD curve and SRAS curve worldwide is Pandemic COVID-19 crisis.

  • Effect on AD curve : The pandemic virus crisis has resulted in a negative shock to Aggregate demand curve . The AD curve has shifted leftwards due to decline in Aggregate demand owing to lockdown .
  • Effect on SRAS curve : The pandemic virus crisis has also resulted in a negative shock in the short run aggregate supply curve . The SRAS curve has also shifted leftwards due to decline in supplies owing to curfew and lockdown which has halted the production of the firms worldwide. Thney could not undertake the production activities due to lockdown and social distancing requirements.
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