Dynamic change. Economic fluctuations, and the AD-AS model.
Dynamic change refers to the process of change or evolution that occurs over time in an economic system. Economic fluctuations are short-term changes in economic activity, such as changes in GDP, employment, and inflation. These fluctuations can be caused by a variety of factors, including changes in consumer and business confidence, changes in monetary and fiscal policy, and external shocks such as natural disasters or economic crises.
The AD-AS model, also known as the aggregate demand-aggregate supply model, is a framework used in macroeconomics to analyze the determinants of economic activity and the interactions between different sectors of the economy. The AD curve represents the relationship between the overall level of economic activity and the overall level of prices, while the AS curve represents the relationship between the overall level of economic activity and the overall level of production costs.
The AD-AS model is a useful tool for understanding the dynamics of economic fluctuations and the factors that drive them. It helps to explain how changes in aggregate demand, such as changes in consumer spending or government spending, can lead to changes in the overall level of economic activity, and how changes in aggregate supply, such as changes in production costs or technological advancements, can lead to changes in the overall level of prices.
Overall, the AD-AS model is an important framework for understanding how dynamic changes in the economy, including economic fluctuations, are caused by the interactions between different sectors and the influence of government policies on the economy.