8 ~ AD/AS Analysis

Question	Answer
When does macroeconomic equilibrium occur?	when AD intersects with SRAS
What happens if PL is too high?	there will be excess S of output and producers will experience ↑unsold stocks
What happens if PL is too low?	there will be excess D in the SR leading to a rundown (signal to firms to expand output)
Graph that illustrates macroeconomic equilibrium?	Image: 4d2e78de-79b0-4ff6-9bc0-f5c98f23794e (image/png)
What happens if ↑AD?	↑AD = ↑SRAS = a higher equilibrium of GDP it also = cyclical ↑output, ↓U Image: 17000821-d283-453b-a11c-df08460a8503 (image/jpeg)
What happens if ↑SRAS?	↑SRAS = ↑AD = higher equilibrium level of GDP it also = ↑firms profits, ↑I Image: 64ae0b53-30ca-4157-a2d7-10290c73ed67 (image/png)
What happens if ↓AD?	↓AD = ↓SRAS = lower equilibrium level of GDP Image: 0d35edb9-3f8e-4ff1-bc18-9fc4952ea274 (image/jpeg)
What happens if ↓SRAS?	↓SRAS = ↓AD = lower equilibrium level of GDP it also = ↓business profits, ↓I = ↓AD Image: 9192c196-767e-417e-a54f-36195de104ad (image/jpeg)
What are the consequences of ↓SRAS?	brain drain = ↑PL steep ↓I = ↓GDP growth ↑C of production from higher costs of commodities = ↓profits, ↓I, ↑U

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	Created by Tara Pugal over 8 years ago