ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Explain that from a macroeconomic perspective, an increase in the aggregate price level diminishes all buyers’ purchasing power. Thus, as the aggre-gate price level rises, the quantity of aggregate output demanded decreases, as illustrated by the downward-sloping aggregate demand curve.

Detailed explanation-2: -The aggregate supply curve shows the relationship between the aggregate price level and the quantity of aggregate output supplied in the economy. Sticky wages are nominal wages that are slow to fall even in the face of high unemployment and slow to rise even in the face of labor shortages.

Detailed explanation-3: -The aggregate supply curve slopes up because when the price level for outputs increases while the price level of inputs remains fixed, the opportunity for additional profits encourages more production.

Detailed explanation-4: -Aggregate Output is the total amount of output produced and supplied in the economy in a given period. Aggregate Income is the total amount of income received by all factors of production in an economy in a given period.