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Aggregate Supply/Demand Question
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4/8/2016 11:51:37 AM
Posted: 10 months ago
I understand that if there's an adverse shift in aggregate supply in the short-run then policymakers can stimulate aggregate demand and cause the demand curve to shift right back to the natural rate of output. But what happens if there is an increase in the short-run aggregate supply? If it's in the long-run I understand that there is an overall increase in the natural rate of output but if during the short-run aggregate supply shifts right does aggregate demand then have to shift left back to the natural rate of unemployment? What would the reasons be for aggregate demand shifting like this?