Price
 level

Real GDP

p

Y

AD

SRAS

Slide the SRAD shifter and the SRAS shifter
to see how the price level and real GDP are
affected. Think of a list of reasons that might
causes the shifts. Then click the check boxes
to check your answer.

Aggregate Demand and Aggregate Supply

1. Expansionary monetary policy
and/or expansionary fiscal policy
2. Households / firms become more 
  optimistic about future incomes.
3. Changes in foreign variables
(1) Real GDP in the U.S. increases 
  slower than real GDP in other 
  countries.
(2) The exchange rate between the 
  dollar and foreign currencies falls.

1. Contractionary monetary policy 
and/or contractionary fiscal policy
2. Households / firms become more 
  pessimistic about future incomes
3. Changes in foreign variables
(1) Real GDP in the U.S. increases faster 
  than real GDP in other countries
(2) The exchange rate between the 
  dollar and foreign currencies rises

What shifts AD to the LEFT?

What shifts AD to the RIGHT?

1. An increase in the labor force
  or the capital stock
2. An increase in productivity
  (due to, say, technological change)
3. A decrease in the expected future
  price level
4. Workers and firms adjust to having
  previously overestimated the price level
5. A decrease in the expected price of
  an important natural resource

1. A decrease in the labor force
  or the capital stock
2. A decrease in productivity
  (due to, say, technological change)
3. An increase in the expected future
  price level
4. Workers and firms adjust to having
  previously underestimated the price level
5. An increase in the expected price of
  an important natural resource

What shifts SRAS to the LEFT?

What shifts SRAS to the RIGHT?

u = Vector((0, 0), (10, 0))
v = Vector((0, 0), (0, 10))
AD = -0.09 (slider from -1.5 to 1.5, step 0.01)
SRAS = -0.04 (slider from -1.5 to 1.5, step 0.01)
h(x) = If[1 ≤ x ≤ 9, (0.8 * x) + 1 - SRAS]
f(x) = If[1 ≤ x ≤ 9, ((-0.8) * x) + 9 + AD]
A = Intersect(h, f, (4.91875, 4.9750000000000005))
N_X: (x(A), 0)
N_Y: (0, y(A))
a = Segment(N_Y, A)
b = Segment(A, N_X)
B = Point(h)
C = Point(f)
c = false
d = false
e = false
g = false