AD-AS Model Flashcards
(5 cards)
1
Q
What shifts the Aggregate Demand (AD) curve?
A
Changes in monetary policy, fiscal policy, expectations, net exports.
2
Q
What shifts the Short-Run Aggregate Supply (SRAS) curve?
A
Changes in input costs (e.g., wages, oil), technology, taxes, supply shocks.
3
Q
What is the long-run aggregate supply (LRAS)?
A
Vertical at potential output (Y*); reflects full employment.
4
Q
What happens if AD increases beyond potential output?
A
Creates an inflationary gap → upward pressure on prices.
5
Q
A
