Instructional Video

Khan Academy: Long Run Self Adjustment

Curated by ACT

A demand shock has a short-run effect on an output and unemployment, but in the long run only the price level will be impacted. If there is an increase in aggregate demand, the price level will go up. Once wages have adjusted to that inflation in the long run, SRAS decreases and returns the economy to full employment output. Shocks do not cause economic growth, only changes in full employment output cause economic growth.

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Resource Details
Grade
9th - 10th
Subjects
Social Studies & History
2 more...
Audiences
For Administrator Use
2 more...
Instructional Strategy
Independent Practice
Lexile Measures
0L