Suppose the equilibrium level of the gross domestic product (gdp) is beyond potential output due to an increase in aggregate demand (ad). using neoclassical economics, rank the statements, beginning with the increase in ad and ending with the neoclassical explanation of how the economy returns to potential output. recall that as stands for the aggregate supply curve.

Total marketing effort is a term used to describe the critical decision factors that affect demand: price, advertising, distribution, and product quality. define the variable x to represent total marketing effort. a typical model that is used to predict demand as a function of total marketing effort is based on the power function: d = axb suppose that a is a positive number. different model forms result from varying the constant b. sketch the graphs of this model for b = 0, b = 1, 0< b< 1, b< 0, and b> 1. (we encourage you to use excel to do this.) what does each model tell you about the relationship between demand and marketing effort? what assumptions are implied? are they reasonable? how would you go about selecting the appropriate model?