What is the AD-AS model?
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Draw the AS/AD model to help you answer the following questions:
1. What does the AS/AD model determine (what information does it give us)?
2. What does the AS curve tell you?
3. Why is the AD curve downward sloping
What are the curves on the AD-AS model?
The aggregate supply (AS) and aggregate demand (AD) model describe the condition of the overall economy; this model is used to predict changes in the price level and output from external shocks to the economy and various government policies.Please describe what the aggregate supply and aggregate demand curves represent; explain what accounts for their shape (i.e., downward sloping AD and upward sloping AD); and give examples of at least two factors each that might result in a shift in AD and AS.