3.5 Equilibrium in the AD-AS Model - AP Econ

What do Economists use the AD-AS model for?

• To represent the relationship between price level and aggregate output in an economy

• To illustrate how output, employment and price levels respond to macroeconomic shocks

Tags

Mod-2

When does short-run equilibrium occur?

• When aggregate supply and aggregate demand are equal

• When SRAS meets the LRAS

• When AD meets LRAS

Tags

Mod-2

Mod-2.G.1

When does long-run equilibrium occur?

• When AD, AS and LRAS all meet

• When AD and AS meet

• At the full-employment level of real output

• When we have high inflation

Tags

Mod-2

Mod-2.G.2

What can the short-run equilibrium create?

• positive output gaps (inflationary)

• Negative output gaps (recessionary gaps)

• Government intervention

• Fed intervention

Tags

Mod-2.G.3

Where can the short-run equilibrium output be?

• At the full-employment level out output

• Above the full-employment level of output

• Below the full-employment level of output

Match the following

• Economy in recession, below full employment, UE is above the natural rate

• 
• Economy at full employment in long-run equilibrium, experiencing NRU

• 
• Economy experiencing inflation, economy above full employment, UE < NRU

• 

Tags

Mod-2

Mod-2.F