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What Are the Effects of an Increase in Aggregate Demand

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Essay

What are the effects of an increase in aggregate demand (AD)in the short run and the long run? What is the effect of an increase in the short run aggregate supply (SAS)? What is the effect of an increase in Long run Aggregate Supply (LAS)?


Definitions:

Amortization

The process of spreading the cost of an intangible asset over its useful life, thereby reflecting its consumption, depletion, or expense recognition over that period.

Book Value

The value of an asset as recorded on the balance sheet, calculated as the cost of the asset minus accumulated depreciation.

Bond Liability

The amount owed by an entity to bondholders, including the principal and any unpaid interest.

Par

The nominal or face value of a bond, share, or other financial instrument, typically the value at which it is issued.

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