AP Macroeconomics / Unit 3: National Income and Price Determination
3.5 Equilibrium in the Aggregate Demand-Aggregate Supply (AD-AS) Model
Notes
Short-run equilibrium: AD meets SRAS.
- Left of LRAS: recessionary gap. Right of LRAS: inflationary gap. On LRAS: long-run equilibrium.
Practice
AD and SRAS cross to the left of LRAS. The economy has:
Output below potential.
At long-run equilibrium, AD, SRAS and LRAS:
Full employment.
In a recessionary gap, unemployment is:
Cyclical unemployment.
Ready for more? Take the Unit 3 test.