|By Sosodef (Sosodef) on Sunday, May 02, 2004 - 05:51 pm: Edit|
in 1981, factories utilized 79 percent of their capacity and in 1982 factories utlized 71 percent of their capacity. In whcih year do you think the economy found itself on a steeper portion of its aggregate supply curve? Why?
|By Sosodef (Sosodef) on Sunday, May 02, 2004 - 06:05 pm: Edit|
|By Relinquo1 (Relinquo1) on Sunday, May 02, 2004 - 06:06 pm: Edit|
1981, because the higher the employment, the steeper the curve. It's the law of Diminishing Marginal Returns I think, increasing employment when you already have high employment is inflationary, while if you have low employment, it expands production with lower inflation.
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