What is aggregate supply? Draw an aggregate supply curve and explain its shape. What factors influence aggregate supply?
Answer to relevant QuestionsWhat is demand-pull inflation? Draw a diagram illustrating such an inflation. Give an example. Describe the clockwise and counterclockwise flows that make up the circular flow model of an economy. What are some of the limitations in using GDP as a measuring rod of our economic well-being? Give an example of transitory income. What effect does this income have on the marginal propensity to consume? Accepting Milton Friedman's permanent income hypothesis, calculate the marginal propensities to consume (MPCs) for each of the four scenarios.
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