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Describe how price level evolves over time
Using the time series we can study how price level evolves over time. If all prices rose by 2% during one month, price level would rise by exactly 2%. If one of the prices rose by 2% when other prices remained unchanged, price level would rise though by much less than 2%. Exactly how much it would rise would rely on the weight of changed price.
The LM-curve in the AS-AD model The LM-curve will shift upwards (downward) when P is increases (decreases) in the AS-AD model is moved L
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equilibrium real wage
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