Draw the AS/AD model to h

Draw the AS/AD model to h

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?at least one reason?4. What factors (exogenous variables) shift the AD curve?5. Identify the point of equilibrium income (RGDP) and state what?s true at that point. Once you know the actual real equilibrium income what can you do with that number?6. Using the PPC model, and the business cycle model, and the AS/AD model make as many comparisons as you can: (identify points on each graph that refer to the same idea).7. From an equilibrium income and price level explain how the economy would get to the new equilibrium level of price and income if the AD curve shifted to the left. Are these new levels of price and income (RGDP) higher or lower than the original levels?

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