1. Contemporary Economics: An Applications Approach By Robert J
Contemporary Economics: An Applications Approach By Robert J. Carbaugh 2nd Edition
Chapter 12:
Macroeconomic Instability: Aggregate Demand and Aggregate Supply

2. Macroeconomic equilibrium
Aggregate Demand
Macroeconomic equilibrium
Aggregate Supply
Price level (price index) A
Macroeconomic equilibrium
Equilibrium price level
Aggregate Demand
Equilibrium level of output
Carbaugh, Chap. 12

3. Aggregate demand curve
Shifts in Aggregate Demand curve
Price level (price index)
Price level (price index) A B
AD0
AD1
AD0
AD2
Carbaugh, Chap. 12

4. The multiplier in action
Aggregate Demand
The multiplier in action
Indirect effect of increased consumption spending
Direct effect of an increase in investment spending
Price level (price index) A B C
Current price level
AD2
AD0
AD1
Carbaugh, Chap. 12

5. Aggregate supply curve
Shifts in Aggregate Supply curve
AS0
AS2
AS0
AS1
Price level (price index)
Price level (price index)
Approaching full employment
Deep recession
Full employment
Carbaugh, Chap. 12

6. The origins of recession
A decrease in aggregate demand
A decrease in aggregate supply
AS1
AS0
AS0
Price level (price index)
Price level (price index) B' A A' B
AD0
AD0
Full employment
Full employment
AD1
Carbaugh, Chap. 12

7. The origins of inflation
Demand-pull inflation
Cost-push inflation
AS0
AS1
AS0
Price level (price index)
Price level (price index) C' B B' A
AD1 A'
AD1
AD0
AD0
Full employment
Full employment
Carbaugh, Chap. 12

8. Is productivity a cure for inflation?
AS0
AS1
Price level (price index)
AD0
AD1
AD2
Carbaugh, Chap. 12