Changes in AD and AS

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    Changes in AD and AS

    • In most economies, AD and AS both increase over time
      • For AD, consumption and investment usually constantly increase
      • AS mainly increases due to improved education and advances in technology
      • Some changes can affect both AD and AAS
        • If a firm decides to spend more on capital goods, e.g. machinery, then productive capacity will also increase.
        • Government spending on education also increase both AD and AS

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