AS-AD Model Flashcards

Flashcards based on AS-AD Exam Summary Sheet

Aggregate Demand (AD)

C + I + G + NX. Shifts from changes in Consumer confidence, Investment expectations, Government spending/tax policy, and Net exports

Short-Run Aggregate Supply (SRAS)

Shifts due to Input prices (e.g., wages), Expectations of inflation, and Temporary shocks

Long-Run Aggregate Supply (LRAS)

Shifts due to Labor force changes, Technology advancements, Capital stock changes, and Natural resources

Permanent consumer optimism shifts

Permanent consumer optimism leads to AD shifts left and SRAS shifts right (eventually)

Permanent investor optimism shifts

Permanent investor optimism leads to AD shifts right and SRAS shifts left (eventually)

Temporary consumer optimism shifts

Temporary consumer optimism leads to AD shifts right with no LR shift

Temporary investor optimism shifts

Temporary investor optimism leads to AD shifts left with no LR shift

Permanent exports shifts

Permanent exports leads to AD shifts right and SRAS shifts left

Permanent imports shifts

Permanent imports leads to AD shifts left and SRAS shifts right

Temporary imports shifts

Temporary imports leads to AD shifts left with no LR shift