Aggregate Demand Graph. The vertical axis represents the price level of all final goods and services. Once the economy reaches this new long-run equilibrium the price level is changed but output is not.
The aggregate supply curve AS is horizontal at GDP levels less than potential and vertical once Yp is reached. The AD-AS aggregate demand-aggregate supply model is a way of illustrating national income determination and changes in the price level. Youll see that the curve is skewed towards an increase in aggregate demand as price levels fall.
The Graph Also Shows Two Possible Outcomes For 2016.
Once the economy reaches this new long-run equilibrium the price level is changed but output is not. The AD curve shows the quantity of goods and services desired by the people of a country at the existing price level. Graph of the aggregate demand curve. Increase in investment spending and an increase in aggregate output demand.
