Chapter 10 terms 101 - The Long-Run Aggregate Supply Curve:...

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The Long-Run Aggregate Supply Curve: The long-run aggregate supply curve (LRAS) is some amount of output of real goods and services in a world in which technology is constant, the price level has not changed, labor productivity has not changed, all resources are fully employed, and people have fully adjusted to all the information they have. The curve is a vertical line relating full employment real GDP to the price level. Economic Growth and Long-Run Aggregate Supply: Economic growth is shown by the outward shifting of the production possibilities curve or as the LRAS curve shifting to the right over time. The Aggregate Demand Curve: The aggregate demand curve shows planned purchase rates for all final goods and services in the economy at various price levels, other things constant. The Real-Balance Effect: The change in expenditures resulting from the real value of money balances when the price level changes. A rise in the price level decreases the real value of a given amount of money balances and planned
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This note was uploaded on 06/06/2011 for the course ECON 101 taught by Professor Dsliva during the Fall '11 term at Moraine Valley Community College.

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Chapter 10 terms 101 - The Long-Run Aggregate Supply Curve:...

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