EXHIBIT 1 The Aggregate Demand Curve 20 EXHIBIT 1 The Aggregate Demand Curve 2 A D P r i c e l e v e l A 1 5 ( C P I , 1 9 8 2 – 1 9 8 4 = 1 ) B 1 5 2 4 6 8 1 1 2 R e a l G D P ( t r i l l i o n s o f d o l l a r s p e r y e a r ) C A U S A T I O N C H A I N D e c r a s i n t h p l v I n c r e a s i t h l G D P d m

EXHIBIT 3 A Shift in the Aggregate Demand Curve 20 EXHIBIT 3 A Shift in the Aggregate Demand Curve A D 1 A D 2 2 P r i c e l v ( C I , 1 9 8 2 – 4 = ) 1 5 1 A B 5 2 4 6 8 1 1 2 R e a l G D P ( t r i l l i o n s o f d o l l a r s p e r y e a r ) C A U S A T I O N C H A I N I n c r e a s i o p - l v d t m : C , G ( X – M ) I n c r e a s i t h g d m u v

EXHIBIT 4 The Keynesian Horizontal Aggregate Supply Curve 20 EXHIBIT 4 The Keynesian Horizontal Aggregate Supply Curve A D 1 A D 2 2 1 5 P r i c e l e v e l ( C P I , 1 9 8 2 – 1 9 8 4 E 1 E 2 A S = 1 ) 1 5 F u l e m p o y n t 2 4 6 8 1 1 2 1 4 1 6 R e a l G D P ( t r i l l i o n s o f d o l l a r s p e r y e a r ) C A U S A T I O N C H A I N A g g r e g a t e d e m a n d P r i c e l e v e l r e m a i n s G o v e r n m e n t i n c r e a s e s a n d t h e c o n s t a n t , w h i l e s p e n d i n g ( G ) e c o n o m y m o v e s r e a l G D P a n d i n c r e a s e s f r o m E t o E e m p l o y m e n t r i s e 1 2

EXHIBIT 5 The Classical Vertical Aggregate Supply Curve 20 EXHIBIT 5 The Classical Vertical Aggregate Supply Curve A S A D 2 A D 1 2 S u r p l s E 1 P r i c e l e v e l 1 5 E ¢ ( C P I , 1 9 8 2 – 1 9 8 4 E 2 = 1 ) 1 5 F u l e m p o y n t 2 4 6 8 1 1 2 1 4 1 6 R e a l G D P ( t r i o n s f d p y ) C A U S T I O N H A g r e a t d m n c s f u l p o y h v E 1 ¢ A t E ¢ u n e m p l o y a d s r f g v i c w T h e c o n m y v s f r E ¢ t 2 , w u l p i d

EXHIBIT 6 The Three Ranges of the Aggregate Supply Curve 20 EXHIBIT 6 The Three Ranges of the Aggregate Supply Curve A S C l a s i c r n g e P r i c e l e v e l Y F I n t e r m d i a g ( C P I , 1 9 8 2 – 1 9 8 4 K e y n s i a r g = 1 ) Y K F u l e m p o y n t R e a l G D P ( t r i l l i o n s o f d o l l a r s p e r y e a r )

EXHIBIT 7 The Aggregate Demand and Aggregate Supply Model 20 EXHIBIT 7 The Aggregate Demand and Aggregate Supply Model A S 2 5 A D 2 P r i c e l e v e l ( C P I , 1 5 1 9 8 2 – 1 9 8 4 = 1 ) 1 E 5 + G D P g a p F u l e m p o y n t 2 4 6 8 1 1 2 1 4 1 6 R e a l G D P ( t r i l l i o n s o f d o l l a r s p e r y e a r )

EXHIBIT 8 Effects on Increases in Aggregate Demand 20 EXHIBIT 8 Effects on Increases in Aggregate Demand ( a ) I n c r e s i g d m t h K y A S 2 A D 1 A D 2 P r i c e l v ( C I , 1 9 8 2 – 4 = ) 1 5 E 2 1 E 1 5 F u l e m p o y n t 2 4 6 8 1 1 2 1 4 R e a l G D P ( t r i o n s f d p y ) ( b ) I n c r e a s i g d m t h A S 2 A D 3 A D 4 P r i c e l v ( C I , 1 9 8 2 – 4 = ) 1 5 1 2 5 E 4 1 E 3 5 F u l e m p o y n t 2 4 6 8 1 1 2 1 4 R e a l G D P ( t r i o n s f d p y ) ( c ) I n r e a s i g d m t h l A S A D 6 A D 5 2 E 6 P r i c e l v ( C I , 1 9 8 2 – 4 = ) 1 5 E 5 1 5 F u l e m p o y n t 2 4 6 8 1 1 2 1 4 R e a l G D P ( t r i o n s f d p y )

EXHIBIT 9 A Rightward Shift in the Aggregate Supply Curve 20 EXHIBIT 9 A Rightward Shift in the Aggregate Supply Curve A S 2 A S 1 3 A D 2 5 P r i c e l v ( C I , 1 9 8 2 – 4 = ) 2 1 7 5 E 1 1 5 E 2 1 5 F u l e m p o y n t 2 4 6 7 8 1 1 2 1 4 1 6 R e a l G D P ( t r i o n s f d p y ) C A U S T I O N H C h a n g e i o r m p c - l v d t s : u , x b I n c r e a s i t h g u p l y v

EXHIBIT 11 Cost-Push and Demand-Pull Inflation 20 EXHIBIT 11 Cost-Push and Demand-Pull Inflation ( a ) C o s t - p u s h i n f l a t i o n ( b ) D e m a n d - p u l l i n f l a t i o n A S 7 3 A S 7 4 A S A D A D 6 5 A D 6 4 9 . 3 P r i c e l e v e l E 2 P r i c e l e v e l ( C P I , ( C P I , 1 9 8 2 – 1 9 8 4 4 . E 1 1 9 8 2 – 1 9 8 4 3 2 . 4 E 2 = 1 ) = 1 ) 3 1 . 5 E 1 F u l e m p o y n t F u l e m p o y n t 4 , 9 4 , 1 2 3 3 , 2 8 3 , 2 7 R e a l G D P ( b i o n s f d r p y ) R e a l G D P ( b i l l i o n s o f d o l l a r s p e r y e a r ) C A U S A T I O N C H A I N C A U S A T I O N C H A I N D e c r e a s e I n c r e a s e i n I n c r e a s e I n c r e a s e i n t h e C o s t - p u s h g o v e r n m e n t i n t h e D e m a n d - p u l l i n o i l a g g r e g a t e i n f l a t i o n s p e n d i n g t o f i g h t a g g r e g a t e i n f l a t i o n p r i c e s s u p p l y t h e V i e t n a m W a r d e m a n d

EXHIBIT A-1 Aggregate Supply Curves 20 EXHIBIT A-1 Aggregate Supply Curves ( a ) S h o r t - u n g e s p l y c v ( b ) L o n g - r u a e t s p l y c v L R A S 2 2 S R A B B 1 5 1 5 P r i c e l v ( C I , 1 9 8 2 – 4 = ) P r i c e l v ( C I , 1 9 8 2 – 4 = ) A A 1 1 C 5 5 F u l e m p o y n t F u l e m p o y n t 2 4 6 8 1 1 2 1 4 2 4 6 8 1 1 2 1 4 R e a l G D P ( t r i o n s f d p y ) R e a l G D P ( t r i o n s f d p y )

EXHIBIT A-2 Self-Correcting AD-AS Model 20 EXHIBIT A-2 Self-Correcting AD-AS Model L R A S 2 S R A A D 1 5 P r i c e l v ( C I , 1 9 8 2 – 4 = ) E 1 5 F u l e m p o y n t 2 4 6 8 1 1 2 1 4 1 6 R e a l G D P ( t r i l l i o n s o f d o l l a r s p e r y e a r )

EXHIBIT A-3 Adjustments to an Increase in Aggregate Demand 20 EXHIBIT A-3 Adjustments to an Increase in Aggregate Demand 3 L R A S S R A 2 2 5 S R A 1 5 A D 2 S R A 1 2 E 4 A D 1 E 3 P r i c e l v ( C I , 1 9 8 2 – 4 = ) 1 5 E 2 1 E 1 5 F u l e m p o y n t 2 4 6 8 1 1 2 1 4 1 6 R e a l G D P ( t r i l l i o n s o f d o l l a r s p e r y e a r )

EXHIBIT A-4 Adjustments to a Decrease in Aggregate Demand 20 EXHIBIT A-4 Adjustments to a Decrease in Aggregate Demand 3 L R A S S R A 2 2 5 S R A 1 5 A D 1 S R A 1 2 E 1 A D 2 P r i c e l e v e l E 2 ( C P I , 1 5 1 9 8 2 – 1 9 8 4 = 1 ) E 3 1 E 4 5 F u l e m p o y n t 2 4 6 8 1 1 2 1 4 1 6 R e a l G D P ( t r i l l i o n s o f d o l l a r s p e r y e a r )