AP Macroeconomics 3.5 Equilibrium in the Aggregate Demand Aggregate Supply Ad As Model Questions

Find short-run equilibrium where AD meets SRAS, identify long-run equilibrium on LRAS, and classify recessionary or inflationary output gaps.

Exam points

draw AD and SRAS and label short-run equilibrium output Y and price level PL at their intersection
add vertical LRAS at YF and identify long-run equilibrium where AD, SRAS and LRAS intersect
classify recessionary, inflationary or zero output gaps from the position of Y relative to YF
use unintended inventory changes to explain price-level adjustment toward AD-SRAS equilibrium

Covered syllabus points

MOD-2.G—Explain (using graphs as appropriate) the short-run and long-run equilibrium price level and output level

[Maximum number: 1]

Assume that Nepal is in long-run macroeconomic equilibrium and has an open economy.

Draw a correctly labeled graph of the aggregate demand, short-run aggregate supply, and long-run aggregate supply curves for Nepal, and show each of the following.

The current equilibrium real output and price level, labeled $\mathrm{Y}_{1}$ and $\mathrm{PL}_{1}$ , respectively

Draw a correctly labeled aggregate demand–aggregate supply graph that shows $\mathrm{PL}_{1}$ and $\mathrm{Y}_{1}$ at the intersection of the aggregate demand (AD) and short-run aggregate supply (SRAS) curves. Figure for Answer to Question 1 — AP Macroeconomics

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