Exhibit 14-4 Aggregate supply and demand curves

As the economy moves to the right from E₁ to E₂ in Exhibit 14-4 along the upward-sloping aggregate supply curve the:

Question

Exhibit 14-4 Aggregate supply and demand curves As the economy moves to the right from E₁ to E₂ in Exhibit 14-4 along the upward-sloping aggregate supply curve the:

Quizplus · Accepted Answer

As the economy moves to the right along the upward-sloping aggregate supply curve, it indicates an increase in production and output. This leads to a decrease in unemployment rate as more jobs are created to meet the demand. However, it may also cause inflation to rise as the increased demand for goods and services can drive up prices. The full employment GDP may or may not be realized depending on various factors such as the level of investment, government policies, etc.

Exhibit 14-4 Aggregate Supply and Demand Curves