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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. | Aggregate Demand and Aggregate Supply 29A Appendix McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Derivation of Aggregate Demand Price Level Aggregate Expenditures (billions of dollars) 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 LO5 29App- Aggregate Demand Shifts AE2 (at P1 ) AE1 (at P1 ) Q1 Q2 AD1 P1 AD2 LO5 29App- | Aggregate Demand and Aggregate Supply 29A Appendix McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Derivation of Aggregate Demand Price Level Aggregate Expenditures (billions of dollars) 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 LO5 29App- Aggregate Demand Shifts AE2 (at P1 ) AE1 (at P1 ) Q1 Q2 AD1 P1 AD2 LO5 29App- . | Aggregate Demand and Aggregate Supply 29A Appendix McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Derivation of Aggregate Demand Price Level Aggregate Expenditures (billions of dollars) 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 LO5 29App- Aggregate Demand Shifts AE2 (at P1 ) AE1 (at P1 ) Q1 Q2 AD1 P1 AD2 LO5 29App- . | Aggregate Demand and Aggregate Supply 29A Appendix McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Derivation of Aggregate Demand Price Level Aggregate Expenditures (billions of dollars) 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 LO5 29App- Aggregate Demand Shifts AE2 (at P1 ) AE1 (at P1 ) Q1 Q2 AD1 P1 AD2 LO5 29App- | Aggregate Demand and Aggregate Supply 29A Appendix McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Derivation of Aggregate Demand Price Level Aggregate Expenditures (billions of dollars) 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 LO5 29App- Aggregate Demand Shifts AE2 (at P1 ) AE1 (at P1 ) Q1 Q2 AD1 P1 AD2 LO5 29App- | Aggregate Demand and Aggregate Supply 29A Appendix McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Derivation of Aggregate Demand Price Level Aggregate Expenditures (billions of dollars) 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 LO5 29App- Aggregate Demand Shifts AE2 (at P1 ) AE1 (at P1 ) Q1 Q2 AD1 P1 AD2 LO5 29App-
