BackDynamic AD-AS Model: Introduction definitions
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A framework where aggregate demand and supply curves shift over time, capturing ongoing economic growth and inflation. Aggregate Demand
Total spending on goods and services in an economy, influenced by population, income, and government expenditures. Aggregate Supply
Total output producers are willing to supply at various price levels, shifting with technological progress and labor force changes. Long-Run Aggregate Supply
Represents the economy's potential output at full employment, increasing as technology and population grow. Short-Run Aggregate Supply
Reflects current production capacity, adjusting rightward with improvements in technology and workforce expansion. Potential GDP
The highest sustainable output an economy can achieve when operating at full employment, rising with economic growth. Equilibrium
The point where aggregate demand and aggregate supply intersect, determining the economy's output and price level. Consumer Price Index
A measure tracking changes in the average price of a basket of goods and services over time. Inflation
A general increase in prices across the economy, commonly observed over the long term in most countries. Recession
A period of declining economic activity, often associated with reduced output and demand. Technological Advancement
Improvements in methods or tools that boost productivity and shift supply curves rightward. Population Growth
An increase in the number of people, leading to higher consumption, investment, and government spending. Government Spending
Expenditures by the public sector, which tend to rise as the population expands. Investment
Expenditures by businesses on capital goods, increasing as the economy grows and opportunities expand. Price Level
The average of current prices across the entire spectrum of goods and services produced in the economy.
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