Sustainability of Growth: Understanding the Role of Long Run Aggregate Supply Curve

The video tutorial discusses the sustainability of economic growth, emphasizing that permanent changes in real output are only achieved by shifts in the long run aggregate supply curve. It analyzes the effects of demand and supply side shocks on equilibrium, highlighting that without a shift in long run aggregate supply, any growth or decline is temporary. The tutorial uses methodical analysis to ensure a robust understanding of these concepts, preparing students for examinations.

How does a negative demand side shock affect consumption and investment?

In what way do supply side shocks differ from demand side shocks in terms of their impact on equilibrium?

What is the significance of shifts in the long run aggregate supply curve?