Essay
This question considers how an economy changes over time and how the aggregate demand and supply model treats the time dimension of an economy.
a) How do the aggregate-demand and aggregate-supply curves shift over time?
b) Related to point a, identify and discuss the limitations to the simple, "static" aggregate-demand and aggregate-supply model. What are the consequences of predicting phenomena that have a time dimension (remember the 'short-run' and 'long-run' distinction) using an essentially static model?
c) How could the static model be changed to better incorporate the time dimension of the economic variables it tries to explain?
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a) In the long run, an economy's output ...View Answer
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