What Determines the Equilibrium Price Level and the Level of Real

question 25

Essay

What determines the equilibrium price level and the level of real GDP in the aggregate demand-aggregate supply (short-run) model?

---

Definitions:

Equilibrium

A state of balance or stability within a system, achieved when all forces or influences are equal and opposing, leading to no net change.

Biological Conditions

Refer to physical or physiological states that affect the living organisms' bodily functions.

Limbic System

A complex system of nerves and networks in the brain, involved in emotions and drives, such as fear, pleasure, and anger.

Emotional Memories

Memories strongly influenced by emotions, which can alter the recall's intensity and accuracy.