Macroeconomics › Section K · The aggregate demand and aggregate supply model › Topic K.5
Growth, unemployment, and inflation in AD/AS
Macroeconomic policy chases three goals: steady growth, low unemployment and low inflation. The AD/AS diagram shows all three at once, and it shows why they sometimes move together and sometimes pull against each other.
In this topic
- Three goals, one picture
- Long-run growth
- Recessions, booms and the output gap
- Worked example: measuring output gaps
- Unemployment in the diagram
- Two sources of inflationary pressure
- Worked example: diagnosing inflationary pressure
- A one-time jump or ongoing inflation?
- A recent case: 2021 to 2022
- Common mistakes to avoid
- Key takeaways
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