Lecture Macroeconomics (19/e) - Chapter 12 (Appendix): Aggregate demand and aggregate supply

Upon completion of this lesson, the successful participant will be able to: Identify how the aggregate demand curve relates to the aggregate expenditures model; describe how the AD-AS model explains periods of demand-pull inflation, cost-push inflation, and recession.

12A Appendix Aggregate Demand and Aggregate Supply McGraw­Hill/Irwin         Copyright © 2012 by The McGraw­Hill Companies, Inc. All rights reserved Derivation of Aggregate Demand Aggregate Expenditures (billions of dollars) LO1 LO1 LO1 45° Price Level AE1 (at P1 ) AE2 (at P2 ) AE3 (at P3 ) P3 P2 P1 AD Q3 LO5 Q2 Q1 Real Domestic Product, GDP 12App-2 Aggregate Demand Shifts AE2 (at P1 ) AE1 (at P1 ) P1 AD2 AD1 Q1 LO5 Q2 12App-3 ...Derivation of Aggregate Demand Aggregate Expenditures (billions of dollars) LO1 LO1 LO1 45° Price Level AE1 (at P1 ) AE2 (at P2 ) AE3 (at P3 ) P3 P2 P1 AD Q3 LO5 Q2 Q1 Real Domestic Product, GDP 12App-2 Aggregate Demand Shifts... P1 AD Q3 LO5 Q2 Q1 Real Domestic Product, GDP 12App-2 Aggregate Demand Shifts AE2 (at P1 ) AE1 (at P1 ) P1 AD2 AD1 Q1 LO5 Q2 12App-3