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
Macroeconomic Equilibrium
Short-Run Macroeconomic Equilibrium: Understanding Economic Fluctuations
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
Long-Run Aggregate Supply (LRAS): Potential Output and Its Drivers
Long-run aggregate Supply (LRAS) is a fundamental concept in economics, revealing the maximum output an economy can produce when all its resources are fully adjustable. Unlike the short run, where some factors are fixed, LRAS reflects a situation
Macroeconomic Equilibrium: Short Run Vs. Long Run
What's it? A macroeconomic equilibrium occurs when aggregate supply equals aggregate demand. Aggregate supply represents the total output of goods and services produced by firms within an economy at a given price level. On the other hand, aggregate
Business Cycle: Understanding the Economy’s Ups & Downs [Phases and Characteristics]
The business cycle, the ever-present rhythm of economic rise and fall, is a fundamental concept for anyone seeking to understand the health of a nation's economy. This cyclical pattern, with its periods of expansion, peak, contraction, and trough,
Very Short-Run Aggregate Supply: Definition and Reason Its Horizontal Curve
What's it: Very short-run aggregate supply refers to the aggregate supply in which firms change the output to a limited extent without changing prices. In this period, prices and most production costs are fixed, so firms can only adjust their
Aggregate Supply: Understanding Production Capacity in the Economy + Determinants
What it's: Aggregate supply (AS) is an economy's total goods and services. It behaves differently in the very short run, short run, and long run, each with a different elasticity. Short-run aggregate supply determines actual real