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Mark Lorenzo

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2023-03-07 15:30:41 -

Aggregate demand and aggregate supply curves
Key points Aggregate supply is the total quantity of output firms will produce and sell—in other words, the real GDP. The upward-sloping aggregate supply curve—also known as the short run aggregate supply curve—shows the positive relationship between price level and real GDP in the short run. The aggregate supply curve slopes up because...

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Mark Lorenzo

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2023-03-23 20:00:34 -

Aggregate demand and aggregate supply curves
Key points Aggregate supply is the total quantity of output firms will produce and sell—in other words, the real GDP. The upward-sloping aggregate supply curve—also known as the short run aggregate supply curve—shows the positive relationship between price level and real GDP in the short run. The aggregate supply curve slopes up because...

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Mark Lorenzo

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2023-03-13 20:40:21 -

Macroeconomic perspectives on demand and supply
Key points Keynes’ Law states that demand creates its own supply. Say’s law states that supply creates its own demand. Many mainstream economists take a Keynesian perspective—emphasizing the importance of aggregate demand—for the short run and a neoclassical perspective—emphasizing the importance of aggregate supply—for the...

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Mark Lorenzo

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2023-06-15 20:13:45 -

Macroeconomic perspectives on demand and supply
Key points Keynes’ Law states that demand creates its own supply. Say’s law states that supply creates its own demand. Many mainstream economists take a Keynesian perspective—emphasizing the importance of aggregate demand—for the short run and a neoclassical perspective—emphasizing the importance of aggregate supply—for the...

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Mark Lorenzo

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2023-02-14 14:37:48 -

Price elasticity of demand and price elasticity of supply
Key points Price elasticity measures the responsiveness of the quantity demanded or supplied of a good to a change in its price. It is computed as the percentage change in quantity demanded—or supplied—divided by the percentage change in price. Elasticity can be described as elastic—or very responsive—unit elastic,...

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Mark Lorenzo

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2023-07-04 19:47:29 -

Price elasticity of demand and price elasticity of supply
Key points Price elasticity measures the responsiveness of the quantity demanded or supplied of a good to a change in its price. It is computed as the percentage change in quantity demanded—or supplied—divided by the percentage change in price. Elasticity can be described as elastic—or very responsive—unit elastic,...

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Leonard Pokrovski

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2026-05-05 09:21:57 -

What is aggregate demand and aggregate supply?
The Economy Is Not a Machine—But We Keep Treating It Like One I once sat in a policy seminar where a senior official insisted that “demand just needs a push.” He said it the way one might talk about restarting a stalled engine. The room nodded. Charts followed—smooth curves, neat intersections, equilibrium points behaving as if summoned by algebra rather than contested...

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Leonard Pokrovski

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2026-01-31 22:14:06 -

What Is Elasticity in Economics? Price Elasticity of Demand and Supply
What Is Elasticity in Economics?Price Elasticity of Demand and Supply In economics, people often want to know how buyers and sellers react when prices change. Do customers stop buying when a product becomes more expensive? Do producers increase production when prices rise? To answer these questions, economists use a concept called elasticity. Elasticity is a key idea because it helps...

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Leonard Pokrovski

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2026-04-29 20:01:35 -

What is supply and demand theory?
What Is Supply and Demand Theory? A Price Tag, a Queue, and a Puzzle I remember standing in a narrow alley in Istanbul years ago, watching a line form in front of a bakery that, at first glance, looked indistinguishable from the dozen others on the same street. The bread was not cheaper. The ingredients were not visibly superior. Yet people queued with a quiet determination, as though the act...

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Leonard Pokrovski

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2026-01-26 17:33:08 -

What Is Supply and Demand?
What Is Supply and Demand? Supply and demand is one of the most basic and important ideas in economics. It explains how prices are set in markets and why they change over time. Whether you are buying food, choosing a phone plan, or understanding why concert tickets are expensive, supply and demand is at work. At its core, this concept describes the relationship between how much of a product or...

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Leonard Pokrovski

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2026-07-24 02:23:08 -

Can inflation be stopped?
Can Inflation Be Stopped? Inflation is one of the most closely watched economic indicators because it affects nearly everyone. When prices for groceries, housing, fuel, and everyday services rise, consumers often ask the same question: Can inflation be stopped? The short answer is yes—but only to a certain extent. Inflation can be reduced and brought under control, but it cannot be...

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Mark Lorenzo

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2023-07-03 20:32:32 -

Changes in equilibrium price and quantity: the four-step process
Key points There is a four-step process that allows us to predict how an event will affect the equilibrium price and quantity using the supply and demand framework. Step one: draw a market model (a supply curve and a demand curve) representing the situation before the economic event took place. Step two: determine whether the economic event being analyzed affects demand...

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Mark Lorenzo

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2023-04-10 20:19:42 -

Changes in equilibrium price and quantity: the four-step process
Key points There is a four-step process that allows us to predict how an event will affect the equilibrium price and quantity using the supply and demand framework. Step one: draw a market model (a supply curve and a demand curve) representing the situation before the economic event took place. Step two: determine whether the economic event being analyzed affects demand...

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Mark Lorenzo

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2023-07-21 19:23:46 -

Command-and-control regulation
Key points Command-and-control regulation sets specific limits for pollution emissions and/or mandates that specific pollution-control technologies that must be used. Although such regulations have helped to protect the environment, they have three shortcomings: they provide no incentive for going beyond the limits they set; they offer limited flexibility on where and...

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Mark Lorenzo

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2023-05-01 20:28:31 -

Command-and-control regulation
Key points Command-and-control regulation sets specific limits for pollution emissions and/or mandates that specific pollution-control technologies that must be used. Although such regulations have helped to protect the environment, they have three shortcomings: they provide no incentive for going beyond the limits they set; they offer limited flexibility on where and...

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Leonard Pokrovski

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2026-06-06 17:01:11 -

Does free enterprise create wealth?
Does Free Enterprise Create Wealth? The Most Misunderstood Success Story in Economic History Walk into any thriving city and look around. The cranes towering above new construction sites. The restaurants packed on a Tuesday night. The warehouses moving products across continents. The entrepreneurs pitching investors. The workers earning paychecks. The retirees living off investment...

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Leonard Pokrovski

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2026-07-22 05:07:44 -

Does government spending increase inflation?
Does Government Spending Increase Inflation? Government spending plays a vital role in every economy. It funds public services, builds infrastructure, supports education and healthcare, and provides financial assistance during economic downturns. However, one common question is whether higher government spending causes inflation. The answer is not simply yes or no—it depends on the state...

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Leonard Pokrovski

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2026-07-22 05:09:07 -

Does printing money cause inflation?
Does Printing Money Cause Inflation? Inflation is one of the most discussed topics in economics, and a common belief is that simply "printing money" causes prices to rise. While there is truth to this idea, the relationship is more complex than many people realize. Whether printing money leads to inflation depends on how much money is created, why it is created, and the overall condition of...

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Mark Lorenzo

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2023-04-13 20:08:37 -

Elasticity and tax revenue
Key points Tax incidence is the manner in which the tax burden is divided between buyers and sellers. The tax incidence depends on the relative price elasticity of supply and demand. When supply is more elastic than demand, buyers bear most of the tax burden. When demand is more elastic than supply, producers bear most of the cost of the tax. Tax revenue is larger...

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