What Happens to Bring the AD-AS System Back into Equilibrium

question 235

Essay

What happens to bring the AD-AS system back into equilibrium when prices are below the
equilibrium level?

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Definitions:

Forward Contract

A tailor-made agreement between two entities to purchase or sell a specific asset at a predetermined price on a future date.

Forward Contract

A financial contract between two parties to buy or sell an asset at a specified future time at a price agreed upon today, not traded on an exchange.

Exchange Gain

A profit resulting from foreign currency transactions when the value of the currency received is higher than the value of the currency exchanged at the transaction rate.

Spot Rate

The current market price for immediate settlement of a currency exchange, commodity, or security.