10.3 Equilibrium and Changes in Equilibrium. Equilibrium occurs at the price level that equalizes the amount of real output demanded and supplied. FIGURE 10-7 The Equilibrium Price Level and Equilibrium Real GDP. AS. 100 92. Price level (index numbers). a. b. AD. 0. 502. 510. 514. - PowerPoint PPT Presentation
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Equilibrium occurs at the price level that equalizes the amount of real output demanded and supplied
Deflation, a decline in the price level, is a rarity in the Canadian economy
Real output takes the full brunt of the decline in AD because product prices are “sticky” in the short run fear of price wars menu costs wage contracts morale, effort, & productivity minimum wage menu costs fear of price wars