Using a graph, show and explain the difference between an anticipated and an unanticipated increase in aggregate demand
What will be an ideal response?
In the above figure, an unanticipated increase in aggregate demand is shown by moving from A to B, along the short-run aggregate supply curve. An anticipated increase in aggregate demand implies that only the price level increases, and the economy moves from A to C as the short-run supply curve shifts to SRAS2.
You might also like to view...
The market demand curve in a perfectly competitive industry is horizontal, while the demand curve faced by an individual perfectly competitive firm is downward sloping
a. True b. False Indicate whether the statement is true or false
If the last $5 spent on movies added 30 utils to your total satisfaction and the last $8 spent on books add 56 utils
A) you can increase your satisfaction by buying more books and seeing fewer movies. B) your total satisfaction is 86 utils. C) you can increase your satisfaction by buying fewer books and seeing more movies. D) you can increase your satisfaction by buying only books.