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AP® Macroeconomics

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Catch-Up Effect and Production

APMACR-INYAYY

What is the “catch-up” effect?

A

The idea that supply increases catch up poor people within a society.

B

Foreigners cannot catch up to the US productivity so they do not even try.

C

Poor countries tend to grow more rapidly then rich countries.

D

Long Run Aggregate Supply cannot catch up to Aggregate Demand during high inflation.

E

Government has a tendency to lag behind business conditions so Aggregate Supply is horizontal at low price levels to allow Government to catch up.