Does economic growth result from increases in aggregate demand, short-run aggregate supply, or long-run aggregate supply?
What will be an ideal response?
Economic growth results from increases in long-run aggregate supply. Economic growth occurs because the quantity of labor increases, capital is accumulated and there are technological advances over time. All three of these factors increase potential GDP and shift the LAS curve rightward.
Economics
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To determine the change in the capital stock, the level of new investment must be adjusted for depreciation because some new investment
A) is not used immediately. B) replaces existing workers. C) is more efficient than existing capital. D) merely replaces existing, but worn out, capital.
Economics
At the equilibrium level of real GDP, total production equals total:
a. saving. b. investment. c. net exports. d. spending.
Economics