Aggregate Supply & Demand

ECON 232 — Introductory Macroeconomics

Aggregate Demand

Shift AD0

Point on Curve

Price Level
100
Output
100

Drag the red dot along the curve

Rightward Shifters

  • Consumer confidence / wealth
  • Government spending (G)
  • Tax cuts (T)
  • Net exports (NX)
  • Lower real interest rates
  • Money supply expansion

What's Happening

Move the slider to shift AD. The dashed curve shows the original position.

Short-Run AS

Shift SRAS0

Point on Curve

Price Level
100
Output
100

Drag the red dot along the curve

Rightward Shifters

  • Lower input prices / wages
  • Lower oil / energy prices
  • Higher productivity
  • Lower expected inflation
  • Fewer regulations
  • Business subsidies

What's Happening

Move the slider to shift SRAS. The dashed curve shows the original position.

Long-Run AS

Shift LRAS0

Point on Curve

Price Level
100
Output (Y*)
100

Drag the red dot up & down

Rightward Shifters

  • Labor force growth
  • Capital stock increases
  • Technology / TFP gains
  • Human capital / education
  • Natural resource discovery
  • Better institutions

What's Happening

Move the slider to shift LRAS. The dashed line shows the original Y*.

Aggregate Demand

Shift AD0

Short-Run AS

Shift SRAS0

Long-Run AS

Shift LRAS0

Equilibrium

Y (SR)
100
Y*
100
P*
100.0
Unemployment
U = U*