1. Module Equilibrium in the Aggregate Demand- Aggregate Supply Model KRUGMAN'S MACROECONOMICS for AP* 19 Margaret Ray and David Anderson

2. What you will learn in this Module : The difference between short-run and long-run macroeconomic equilibrium The causes and effects of demand shocks and supply shocks How to determine if an economy is experiencing a recessionary gap or an inflationary gap and how to calculate the size of the output gaps

3. Model used to analyze economic fluctuations The AD-AS Model

4. Shifts of the Aggregate Demand Curve ∆C, ∆I, ∆G, ∆X - ∆M ∆Expectations ∆Wealth ∆Existing Stock of Capital ∆Fiscal Policy ∆Monetary Policy

5. Shifts of the Short-Run Aggregate Supply Curve ∆ Commodity Prices ∆ Nominal Wages ∆ Productivity

6. Short-Run Macroeconomic Equilibrium Price Level Aggregate Output Shortage/Surplus Relative Declines

7. Shifts of Aggregate Demand: Short-Run Effects Demand Shock Negative Demand Shock Positive Demand Shock

8. Shifts of the SRAS Curve Supply Shock Negative Supply Shock Stagflation Positive Supply Shock

9. Long-Run Macroeconomic Equilibrium Recessionary Gap Self-Correction Inflationary Gap Self-Correction Output Gap