A rising price level in the short-run, however, may originate from either increased aggregate demand or decreased
aggregate supply and these different causes of inflation have opposite effects on real income and in turn the exchange rate.
We examine the role of aggregate demand price level elasticity for the balance of trade when an economic expansion happens as a result of either an increase of aggregate demand or an increase of short-run
aggregate supply. Section III concludes the paper with a brief summary of the results.
In the long term, the
aggregate supply is inextricably linked with the aggregate demand.
Aggregate supply-driven deflation, however, is an important issue going forward as the continued opening of China and India and the ongoing rapid technological gains should continue to buffet the world economy with positive
aggregate supply shocks.
However, the market position of the combined entity in aggregates would be modest and the Commission concluded that the proposed acquisition would not create any risk of
aggregate supply problems for other local ready-mixed concrete producers.
A survey of some principles and intermediate-level textbooks suggests that no such standard definitions of time horizons exist within macroeconomics, and the corresponding treatments of
aggregate supply are also quite diverse.
Essentially, the Internet may shift out the
aggregate supply curve of the economy.
The problem is that the pickup in productivity tends to create even greater increases in aggregate demand than in potential
aggregate supply. This occurs principally because a rise in structural productivity growth has its counterpart in higher expectations for long-term corporate earnings.
The macroeconomic model of
aggregate supply and demand portrays the market forces of an economy and the interrelationships between these forces that affect supply of and demand for a good (Samuelson & Nordhaus, 1985).
As a result, the Midtown South office market reached a significant milestone, as the
aggregate supply of available office space fell below three million square feet (2.95 million) for the first time.
In particular, evidence suggests that there is a unit root in GDP and thus, deviations from trend are not purely transitory fluctuations driven by aggregate demand.[2] Output fluctuations are, to some extent, a function of permanent
aggregate supply shocks.
The history of the Kuznets cycle illustrates how aggregate-demand shocks can produce endogenous changes in
aggregate supply. Economies of scale, learning effects, and convergences of expectations - many within the spatial contexts of city building and frontier settlement - seem to have been especially important in making the
aggregate supply "path-dependent." Institutional innovation (particularly government regulation) has been another source of endogenous change in
aggregate supply.
