4.3 Equilibrium Real National Output Flashcards by Sam Heron

Q

Where is equilibrium?

A

Where AD intersects with AS

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Q

What is the relation to injections/ withdrawals?

A

Equilibrium is when I+G+X = S+I+T

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Q

Effects of a fall in AS?

A

Higher inflation
Reduced real GDP
Lower profits, investment, employment
Worsen trade balance

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Q

Causes of fall in LRAS?

A

Natural disaster
Labour migration
Declines in productivity

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