Please enable JavaScript.
Coggle requires JavaScript to display documents.
MR02 AD/AS Model, - - Coggle Diagram
MR02 AD/AS Model
Aggregate Demand
Demand for all goods & services at different price levels
AD = C + I + G + (X - M)
Inverse relationship between general price level and GDP
Change in general price level = movement along the AD curve
AD Factors
Consumption
Income
Wealth
Interest rates
Consumer confidence
Investment
Interest rates
Business confidence
National Income
Technology
Government expenditure
Fiscal policies
Expansionary
Contactionary
Net Exports
Domestic Income
Foreign income
Demand for imports
Demand for exports
Tourist spending
Inflation
Exchange rate
Aggregate Supply
Total supply of goods & services in the economy at any give price level
SRAS
Period when prices of factors of production do not change
Direct relationship between GPL and SRAS
Change in GPL = movement along SRAS curve
LRAS
All resources are fully employed, i.e. full employment
All prices (input & output) adjust in the long run
Vertical relationship
Independent of GPL
Equilibrium
Long-Run
Short-run
SRAS Factors
Supply shocks
Cost of production
Oil prices
Raw material
Wages
Rental
Government taxes and subsidies
LRAS Factors
Resource
Quantity
Land reclamation
Access to new supply
Discovery of new resources
Birth rate
Labour force participation
Immigration
Investment in capital
Quality
Training
Technology
Education
R&D
-