Log In | Register
The combination of price and real output that is exclusively compatible with both aggregate demand and aggregate supply is the equilibrium ( macro equilibrium ) . The real GDP gap is the difference between full employment GDP and equilibrium GDP.
K for Keynesian model, helps people in the market on how to get out in a troubled economy through its adjustment process fiscal stimulus are tax cuts or spending hikes to elevate ( shift increase ) aggregate demand. But for a Keynesian strategy, get someone to spend more on goods and services is the way out of recession. ( The aggregate demand curve would shift to the right as spending increases ).
