What's it: An adverse economic shock is a sudden, unexpected, and dramatic change in aggregate supply and demand, hurting the economy. For example, shocks result in high and uncontrollable inflation. Or it causes a recession. In other cases, it
Aggregate Supply
Economic Shock: Types, Causes, Impacts
What's it: An economic shock is a sudden and unexpected significant change in an economy's output due to changes in external factors. Shocks suddenly cause the aggregate supply curve or demand curve to shift to the right or left. Such events not
Long-Run Macroeconomic Equilibrium and Its Explanation
What's it: Long-run macroeconomic equilibrium occurs when the aggregate demand curve intersects the short-run aggregate supply curve at the point of the long-run aggregate supply curve. In other words, the short-run macroeconomic
Short-run Macroeconomic Equilibrium and Its Implications for the Economy?
What's it: A short-run macroeconomic equilibrium occurs when the aggregate demand curve and the short-run aggregate supply curve intersect. It determines the actual output (real GDP) and the price level in the economy. Equilibrium may be
Supply Shock: Examples, Causes, Effects
What's it: A supply shock is a sudden and unexpected event causing a dramatic change in output. It can be positive or negative. It is positive if it increases output and negative if it decreases output. Shocks here can refer to macroeconomic
Long-Run Aggregate Supply: Its Curve And Influencing Factors
What's it: Long-run aggregate supply (LRAS) refers to the total output produced in the economy when all inputs are variable. Wages and other inputs are flexible and change proportionately in response to changes in the price level. Thus, firms
Physical Capital: Meaning, Importance, Effects on the Economy
What's it: Physical capital refers to man-made means to aid production. Economists classify it as a factor of production. Examples of physical capital are buildings, vehicles, machinery, and equipment. You can find the components in the fixed
Short-Run Aggregate Supply: Its Curve and Determinants
What it's: Short-run aggregate supply refers to aggregate output when some costs are variable. If we plot the curve, it has a positive slope, where aggregate output increases as the price level increases and vice versa. The positive slope is
Labor Productivity: Meaning, Effects, How to Calculate and Increase It
What's it: Labor productivity refers to the output a worker can produce. It applies to a company, industry, or economy. To calculate it, you can compare the quantity output with workers or hours worked. Calculating labor