3.2.4—Alternative views of aggregate supply Topic Practice
3.2.4—Alternative views of aggregate supply Topic Practice
Students practise distinguishing Keynesian and monetarist/new classical AS curves, defining key terms like recession and inflationary gap in context.
How this is tested
- define ‘recession’ as two consecutive quarters of negative real GDP growth
- define an inflationary gap as excess demand when actual output rises above LRAS output
- sketch a Keynesian AD/AS diagram with spare capacity on the horizontal AS segment