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3 Tutorials that teach Equilibrium
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Author: Colton Cranston

This lesson covers equilibrium.

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Notes on "Equilibrium"

Key Terms

Aggregate Demand

The total amount of goods and services demanded in an

economy at a specific point in time and at a prevailing price level.


Short-run aggregate supply is assumed to maintain the positive price and

quantity correlation; more can be produced through increased resource

utilization, technological improvements or other factors. SRAS is an upward

sloping curve.


Long-run aggregate supply is assumed to be constant in the long-run as

in the long-run resources are assumed to be used optimally, leaving no potential

for increasing capacity. LRAS is a vertical curve.

Price Level

An aggregate index value that provides an indication of the increase

in prices from one period to another; used to evaluate inflation across periods.


Real Gross Domestic Product: Gross Domestic Product (the sum of the

final value of goods and services produced over a specific time interval and

within a country’s national borders.) calculated across time periods using a

constant price level.


Measured as a percentage rate of the number of individuals that

would like to work and are an active part of the labor force to the number of

individuals that comprise the active labor force. Unemployment may be

categorized as frictional, structural and cyclical components.


The business cycle period that coincides with the lowest GDP for a given

point in time.


The business cycle period that coincides with the maximum obtainable

GDP for a given point in time.