burnley
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Report Thread starter 7 years ago
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Hello,

I've been revising policies to reduce unemployment today and I"ve been using tutor2u for help in addition to my textbook.

I came across a diagram about reflating aggregate demand and the explanation the website gives is "In the diagram below we see an increase in aggregate demand leading to an expansion of aggregate supply. Because of the increase in demand for output, the demand for labour at each wage rate will grow - leading to an increase in total employment."

This is the diagram (click to enlarge) -

Name:  unemployment10.gif
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Could anyone please explain to me what this diagram means? I'm at a complete loss as to how it relates the the explanation. Economics is my weakest subject so I'm really trying hard to understand absolutely everything

Thank you
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Jkizer
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Report 7 years ago
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The left represents growth of the economy.

Since the economy grew, industries require more labour to meet with the added demand. Therefore the demand shifts.

Please feel free to ask / pm if I went to quick, or if you have any other questions with AS economics. It's tough to get use to, but I'm sure you will get it with more questions!
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