The primary purpose of the AD-AS model is to explain:
A) the steady-state output.
B) trends in output.
C) business fluctuations.
D) long-term economic growth.

Question

Quizplus · Accepted Answer

The AD-AS model is primarily used to explain business fluctuations, which refer to short-term fluctuations in output and employment levels. The model shows how changes in aggregate demand and aggregate supply can lead to changes in these economic variables. The other choices (A, B, D) refer to long-term trends or steady states, while the AD-AS model focuses on short-term fluctuations.

The Primary Purpose of the AD-AS Model Is to Explain