Answer to Question #117814 in Macroeconomics for rey

Question

For the
following factors listed below, predict, and draw the shifts of the curves AD and AS,
respectively. Provide an explanation with the support from a case study.
a) An increase in AS due to full employment.
b) A decrease in AD due to recession

Answer 1

aFull employment, is the maximum quantity that an economy can produce .An increase in AS due to full employment shift the AS curve to the right.

b)During a recession,many business are are suffering low profits and losses,this causes decrease in AD and shifts the AD curve to the left.