AP Macroeconomics / Unit 3: National Income and Price Determination
3.6 Changes in the AD-AS Model in the Short Run
Notes
- AD increase: higher price level and output (demand-pull inflation).
- SRAS decrease: higher price level, lower output (stagflation, cost-push).
Practice
SRAS shifts left. The result:
Stagflation.
AD increases. In the short run:
Demand-pull.
Stagflation means:
Bad on both fronts.
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