Principles of Macroeconomics / Unit 18 MAC 1708 short lesson, about 20 seconds
Model Two: Aggregate Demand and Aggregate Supply
Captions available
The idea
The whole economy on one diagram. Real GDP on the horizontal axis, the price level on the vertical. Aggregate demand slopes down, short-run supply slopes up, and long-run supply stands vertical at potential output.
In practice
This is the course's central model, and units eight to sixteen all use it.
Where people slip
The vertical axis is a price level, not an inflation rate.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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