Questions tagged [aggregate-production]

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How is Aggregate Supply(Willing) equal to National Income(Actual)?

Acc. to definition of Aggregate Supply It is the total value of final goods and services that the producers are willing to supply in country . Definition of National Income It is the value of ...
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2answers
77 views

Can Autonomous Consumption be Greater than Income of individual?

Autonomous consumption is done either through past savings or by borrowing money or selling asset to have minimum consumption in order to survive. So can autonomous consumption be greater than our ...
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98 views

Linearization of VES production funtions

I know that the linearization of a CES (constant elasticity of substitution) funtion is a bit complicated. There is even an R package dedicated just for that - the econometric estimation and ...
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24 views

Profits and Aggregate Supply

I feel like this is quite a stupid question, but I can't wrap my head around it. Why do suppliers make less of a good as profits drop? Intuitively, shouldn't they make more of the good in order to ...
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42 views

What is the exact difference between Income Effect and Wealth Effect?

I’m aware that in basic economics class one of the explanations for the downward-sloping Aggregate Demand Curve is the wealth effect or Pigou effect, which means that as price level goes down, your ...
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15 views

Supply elasticity on a piece-wise linear supply function

The supply elasticity at a point is the willingness to produce more or less after the price has changed (due to whatever reason?). $$\mu_{Q,P}=\frac{\partial Q_S/Q_S}{\partial P/P}=\frac{\partial Q_S}...
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1answer
33 views

How is employment related to aggregate demand and aggregate supply?

When we talk about excess or deficient aggregate demand , how does employment suddenly comes ?
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25 views

Estimating aggregate production function with sharp decline during a crisis period

How could one go about estimating a long term aggregate production function, when there is a sharp decline in both factor inputs (i.e. investment and hours worked) and output for a few consecutive ...
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22 views

How do environmental deregulations push an economy inside its Production Possibility Frontier and make it inefficient?

I read in a textbook that if we plot a PPF with automobile manufacturing and clean air as the axes and the company pollutes the state making clean air (a public good) scarce, automobile manufacturing ...
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2k views

Difference between short run and long run supply curves?

We know that in short run supply curve is horizontal which means that prices remain rigid while quantity of supply adjusts according to demand. However, in long run this reverses. I know about some ...
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2answers
104 views

Why can't saving be equal to income?

A person can save all his income , right ? Then why can't saving be equal to income ? In the context of aggregate demand and supply .
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8 views

Query regarding derivation of aggregate demand curve

What is the difference between AD curve derive from is-lm model and quantity theory of money.
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1answer
55 views

A hypothetical question on neutrality of money

Let's assume that we start with an economy producing two goods, A and B, with each priced $100. Each good is weighted using the same quantity, so CPI equals 100. Nominal wage is also 100 dollars. An ...
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58 views

Economic interpretation of a CES production function

I am following a paper where a production function of this type is used. $$Y=\left [\beta K^{- \rho}+\alpha \eta \left (\frac{K}{L} \right )^{-c(1+\rho)}L^{- \rho} \right ]^{-1/\rho}$$ It is a ...