3.6 Changes in the AD - AS Model in the Short Run

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6 Terms

1
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Shifters of Aggregate Demand

AD = C + I + G + (X-M)

2
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Shifters of Aggregate Supply

AS = R + A + P

3
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Stagflation

stagnate economy + inflation

  • considered recessionary gap

4
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Demand - Pull Inflation (AD Increase)

demands pulls up prices. Consumers want goods and service so they bid up prices.

5
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Cost - Push Inflation (SRAS Decrease

higher production costs increase prices

  • negative supply shock

6
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negative supply shock

increases the costs of production and forces producers to increase prices