1. Recession in the United States
This had the effect of increasing unemployment and further reducing business. ... Classical economists believe that the presence of unemployed resources causes wages to fall, reducing costs to suppliers and causing the aggregate supply curve to shift from AS1 to AS2, restoring the economy to full employment. ... The increase in government expenditures should be sufficient to cause the aggregate demand curve to shift to the right from (AD1) to (AD2), restoring the economy to the natural level of real GDP. This increase in government expenditures doesn't have to be exactly equal to the di...
- Word Count: 714
- Approx Pages: 3
- Grade Level: Undergraduate