AD AND AS DIAGRAMS

Question 1

Decrease and increase in aggregate demand

Answer 1

Question 2

Short run aggregate supply

Answer 2

A change in the price level causes a movement along from W to X

Question 3

Increase in aggregate demand (AD), and the impact on macro equilibrium

Answer 3

Question 4

Decrease in short run aggregate supply (SRAS), and the impact on macro equilibrium

Answer 4

Question 5

Increase in short run aggregate supply (Classical model), and the impact on macro equilibrium

Answer 5

Question 6

Decrease in short run aggregate supply (Classical model)

Answer 6

Shows cost-push inflation

Question 7

Increase in aggregate demand (Classical model)

Answer 7

Shows demand-pull inflation

Question 8

Increase in short run aggregate supply (classical model)

Answer 8

Showing disinflation or deflation due to falling costs in economy, eg lower oil prices

Question 9

Long run equilibrium real national output and price level in the classical model

Answer 9

Question 10

Long run effect of an increase in aggregate demand (Classical model)

Answer 10

Question 11

Increase in aggregate demand (Classical model)

Answer 11

Question 12

Decrease in long run aggregate supply (classical model)

Answer 12

Question 13

Increase in long run aggregate supply (Classical model)

Answer 13

Question 14

Increase in economy’s productive potential

Answer 14

Increase in long run aggregate supply (classical model) increasing the full employment level of real national output

Question 15

Negative output gap (Classical model)

Answer 15

Question 16

Macroeconomic Equilibrium (Keynesian model) with a large negative output gap

Answer 16

Question 17

Increase in aggregate demand, Keynesian model

Answer 17

Question 18

Increases in aggregate demand (Keynesian model), with additional multiplier effect

Answer 18

Question 19

Increase in aggregate demand with multiplier effect (Keynesian model)

Answer 19

Leading to demand-pull inflation

Question 20

Negative output gap between Y1 and Yfe (Keynesian model); increase in AD to AD2 starts to close the gap

Answer 20

Question 21

Decrease in aggregate demand (Keynesian model)

Answer 21

Flip AD1 and AD2
Also Y1 and Y2 and P1 P2