Which of the following is an assumption of the dynamic aggregate demand aggregate supply model quizlet?

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Which of the following is an assumption of the dynamic aggregate demand aggregate supply model quizlet?

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Which of the following is an assumption of the dynamic aggregate demand aggregate supply model?

dynamic AD -AS model explicitly incorporates the response of monetary policy to economic conditions. In the conventional model, the assumption was that the central bank sets the money supply, which in turn is one determinant of the equilibrium interest rate.

Which of the following is an assumption made by the dynamic model of aggregate demand and aggregate supply quizlet?

Which of the following is an assumption made by the dynamic model of aggregate demand and aggregate supply? The short-run aggregate supply curve shifts to the right except during periods when workers and firms expect higher wages.

How does the dynamic model of aggregate supply and aggregate demand explain inflation quizlet?

How does the dynamic model of aggregate supply and aggregate demand explain inflation? By showing that if total spending in the economy grows faster than the total production, prices will rise.

What do the aggregate demand and aggregate supply models help explain?

The aggregate demand/aggregate supply model is a model that shows what determines total supply or total demand for the economy and how total demand and total supply interact at the macroeconomic level. Aggregate supply is the total quantity of output firms will produce and sell—in other words, the real GDP.