Macroeconomics › Section K · The aggregate demand and aggregate supply model › Topic K.2
Building the AD/AS model
One diagram, three lines: aggregate demand, short-run aggregate supply and long-run aggregate supply. Together they show what sets total output and the overall price level, and they are the main tool for every macro topic that follows.
In this topic
- One diagram for the whole economy
- Aggregate demand
- Why the AD curve slopes down
- Worked example: a rising price level
- Short-run aggregate supply
- Potential GDP and long-run aggregate supply
- Movements along versus shifts of the curves
- Equilibrium in the model
- Worked example: finding equilibrium from a table
- Common mistakes to avoid
- Key takeaways
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