Equilibrium Output Video Lecture | Economics Class 12 - Commerce

hello everybody and welcome to this
macroeconomic video on equilibrium
output now equilibrium output is defined
as being the corresponding output and
price level when aggregate demand is the
same as aggregate supply and what that
means is what is our output on our
x-axis and our price level on our y-axis
when aggregate demand equals aggregate
supply we're not a group demand curve
and our aggregate supply curve cross so
when they cross what is the price level
and what is the output and I'm going to
go over how our equilibrium output
changes when there are changes in
aggregate demand and aggregate supply so
firstly here we have a short-run diagram
and our shifts in curves show that
aggregate demand has increased from 81
to 82 and due to this our equilibrium
price level has increased from p1 to p2
and our equilibrium output has increased
from q1 to q2
next we have the opposite occurring so
aggregate demand is decreasing are a
great demand curve is shifting left from
a d1 to a d2 and due to this our price
level is falling from p1 to p2 and we so
our output is falling from q1 to q2 next
we have short-run aggregate supply
increasing and when there is an increase
in short on aggregate aggregate supply
our curve shifted downwards or to the
right and this is shown here by ship
from SR a s 1 to s ra s 2 and due to
this our equilibrium price level has
decreased from p1 to p2 and our
equilibrium output has increased from q1
to q2
next we have short-run aggregate supply
decreasing and this is shown by shifting
the curve upwards from SR a s 1 to s ra
s 2 and due to this our price level has
increased from P 1 to P 2 and our
equilibrium output has fallen from Q 1
to Q 2 next we have an increase in
aggregate demand in the classic long-run
so here are a good demand curve is
shifted right like normal from a d12 ad
to and due to this our equilibrium price
level has risen from P 1 to P 2 but
because in the long run the classic
Theory there is a fixed level of output
our quantity being outputted has not
changed we are still at Q 1 next we have
aggregate demand falling in our classic
theory so here our curve shift left from
81 to 82 this results in a full of the
price level from P 1 to P 2 and again
because we are at a fixed level of
output in the long run classic theory
our output level does not change from Q
1 next we have an increase in long-run
aggregate supply the classic theory and
this is shown by a shift right of our
vertical long-run aggregate supply curve
from lra s 1 to LRA s 2 and remember
this is equivalent to an expansion of
the PPF now due to this our equilibrium
price level has fallen from P 1 to P 2
and our equilibrium output has risen
from Q 1 to Q 2 because our fixed level
of output has increased due to economic
expansion and economic growth
however if our long-run aggregate supply
Classic Falls then we get a shift of our
long-run aggregate supply curve from LRA
s1 to LRA s2 so leftward shift and due
to this our equilibrium price level
rises from p1 to p2 and our equilibrium
output decreases from q1 to q2 because
there has been a fall in the maximum
output of the economy and this is
equivalent to a contraction inwards of
the PPF curve next we have our King's
Ian long-run graph and if we are working
below full efficiency so on our
horizontal line if there is an increase
in accurate demand from 81 to 82 a right
shift of the curve then there is no
change in price level we remain at p1
all the time
however our output increases from q1 to
q2 and the opposite will occur if our
aggregate demand decreases from 81 to 82
a leftward shift of the curve as we are
again below for efficiency on a
horizontal part of the line our price
level remains the same at p1 however
this time our equilibrium output
decreases from q1 to q2
however things are slightly different if
we have a change in aggregate demand
when we are working at fill efficiency
when we are on the horizontal parts of
the kingdom curve so if there is an
increase in aggregate demand from a d1
to a B to a shift right of the curve
when we are working at full efficiency
then there will be an increase in the
equilibrium price level from p1 to p2
but no change in output because we are
working at full efficiency at our
maximum output we can't produce anymore
and the opposite will occur if our
aggregate demand Falls when we are
working at full efficiency our ID curve
will shift left from 81 to 82 we will
get a decrease in the price level from
p1 to p2 and again which will still be
working at q1 our maximum output because
we are working at maximum efficiency
still if there is an increase in our
long-run aggregate supply in the
Keynesian theory then our curve will
shift to the right from lra s1 to LRA s2
however in this scenario as our
equilibrium is below full efficiency on
the horizontal part of the curve our
price level and quantity outputted do
not change and again there should be no
change in equilibrium price level or
equilibrium output if our equilibrium is
below full efficiency on the horizontal
curve and there is a decrease in
long-run aggregate supply this time
shown by a shift left of the curve from
lra s1 to l ra s2 however if our
equilibrium and our economy are at fill
efficiency than the story is slightly
different so this is on the vertical
part of the curve now if there is an
increase in long-run aggregate supply so
the curve shifts right from lra s1 to
lra s2 we experience a decrease in the
equilibrium price level from p1 to p2
and an increase in our output from Q 1
to Q T as our maximum output has
increased our full efficiency has
increased
and the opposite will occur if there is
a decrease in long-run aggregate supply
when we are working at full efficiency
on a Keynesian curve so with a decrease
our curve will shift left from LRA s12
LRA s2 and this results in an increase
in the equilibrium price level from p1
to p2 and a fall in the equilibrium
output from q1 to q2 because our full
efficiency on maximum output has
decreased