According to the simple extended AD-AS model, aggregate demand is a major determinant of the
level of output in the long run.

Question

Quizplus · Accepted Answer

According to the simple extended AD-AS model, in the long run, the level of output is determined by the economy's potential output, which is determined by factors such as technology, capital stock, and labor force. Therefore, aggregate demand does not have a significant impact on the long run level of output in this model.

According to the Simple Extended AD-AS Model, Aggregate Demand Is