Lecture Economics (19/e) - Chapter 29-Appendix: Aggregate demand and aggregate supply

After completing this chapter, students will be able to: Describe how the aggregate demand-aggregate supply model explains periods of demand-pull inflation, cost-push inflation, and recession; identify how the aggregate demand curve relates to the aggregate expenditures model.

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45°

AE2 (at P2 )

AE3 (at P3 )

AE1 (at P1 )

Q3 Q2 Q1

Real Domestic Product, GDP

AD

P3

P2

P1

1

2

3

2

1 3

LO1 LO1 LO1

AE2 (at P1 )

AE1 (at P1 )

Q1 Q2

AD1

P1

AD2