ECO 121 Lecture Notes - Lecture 4: Aggregate Supply, Aggregate Demand, Final Good

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Aggregate supply is the relationship between the price level and . State of the economy"s technology how clever are we at combining our inputs into outputs. The quantity and quality of the economy"s labor supply how much. How is the economy organized (what type of economic system?) The sras curves upward and rightward, this suggest that at lower y levels, increases in aggregate demand (ad) will have a small effect on the price level (p) As y increases, we enter a range where ad starts to create a. If economy pushes above full employment (y*), then we are likely to have considerable upward pressure on p substantial price pressure . Slope of the curve slopes upwards like supply curve. Slope upward because prices of inputs that go into final-goods production lag behind the prices of those final good and services that compromise gdp.

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