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Economics 2.3.3 - Coggle Diagram
Economics 2.3.3
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Keynesian
hockey stick shape
at low levels of output, the curve is horizontal so firms can increase output without raising prices due to unused capacity and high unemployment
As the economy approaches full employment, the curve starts to slope upwards, reflecting increasing pressure on wages and prices.
At full employment, the curve becomes vertical, indicating that output is at its maximum sustainable level, and any further demand increase will only lead to higher prices.
in the short run, output can be increased without causing inflation until full employment is reached
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LRAS curve
relationship between total quantity of goods and services that firms in the economy are willing to produce and the price level assuming that all prices including nominal wages are flexible