Unformatted text preview: buying
more, and sellers are helping to eliminate the
surplus by producing less.)
At P2, the quantity demanded of goods
and services (Q2) is greater than the quantity supplied (Q1), which means a shortage of goods and services. Thus, the price level rises, people buy fewer goods and
services, and producers produce more.
The shortage begins to disappear because
of the actions of buyers and sellers.
(Buyers are helping to eliminate the
shortage by buying less, and sellers are
helping to eliminate the shortage by producing more.) Only at PE is the quantity
of goods and services supplied equal to
the quantity of goods and services
demanded; both are QE.
Aggregate supply and demand are influenced by a number of factors and act as an
influence on some other factors. One of
the factors that aggregate supply and
demand impact is unemployment, which
we discuss next. Section 4 Measuring Price Changes and the Unemployment Rate 305 11 (286-309) EMC Chap 11 11/17/05 6:06 PM Page 306 What Is the
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This document was uploaded on 01/16/2014.
- Winter '14