Some Economists Argue That at Low Levels of GDP (Lower

question 142

Essay

Some economists argue that at low levels of GDP (lower than the long-run level of output), a shift to the right in the aggregate-demand curve increases output without a significant increase in the price levels (without inflation), while at higher levels of output (above the long-run level), a shift in the aggregate-demand significantly increases the price level without much effect on output. How would an aggregate-supply curve look like according to this theory?

---

Definitions:

GDP Deflator

An economic metric that converts the current market value of all goods and services produced domestically into a figure adjusted for inflation.

Changes in Prices

Variations in the cost of goods or services over time, which can be influenced by factors like supply and demand, inflation, or market events.

Amounts Being Produced

Refers to the volume or quantity of goods and services that are generated or manufactured by a business or economy over a specific time period.

Social Security Check

A monthly payment issued by the government to eligible individuals, typically retirees, disabled persons, and survivors of deceased workers, as part of a social insurance program.