Fig. 1 The Two-Way Relationship Between Output and the Price Level

1
Fig. 1 The Two-Way Relationship Between Output
and the Price Level
2
Fig. 2 Deriving the Aggregate Demand Curve
Price Level
K
140
J
100
AD
Real GDP ( Trillions)
10
6
3
Fig. 3 A Spending Shock Shifts the AD Curve
Price Level
100
H
E
AD2
AD1
Real GDP ( Trillions)
10
15
4
Fig. 4a Effects of Key Changes on the Aggregate
Demand Curve
(a)
Price Level
P3
P1
P2
AD
Real GDP
Q3
Q1
Q2
5
Fig. 4b Effects of Key Changes on the Aggregate
Demand Curve
(b)
Price Level
AD2
AD1
Real GDP
6
Fig. 4c Effects of Key Changes on the Aggregate
Demand Curve
(c)
Price Level
decreases
AD1
AD2
Real GDP
7
Fig. 5 The Aggregate Supply Curve
Price Level
AS
130
B
100
A
80
C
Real GDP ( Trillions)
13.5
10
6
8
Fig. 6 Shifts of the Aggregate Supply Curve
AS2
Price Level
AS1
L
140
100
A
Real GDP ( Trillions)
10
9
Fig. 7a Effects of Key Changes on the Aggregate
Supply Curve
(a)
Price Level
AS
P3
P1
P2
Real GDP
Q2
Q1
Q3
10
Fig. 7b Effects of Key Changes on the Aggregate
Supply Curve
(b)
AS2
Price Level
AS1
Real GDP
11
Fig. 7c Effects of Key Changes on the Aggregate
Supply Curve
(c)
Price Level
AS1
AS2
Real GDP
12
Fig. 8 Short-Run Macroeconomic Equilibrium
AS
Price Level
B
140
E
100
F
AD
Real GDP ( Trillions)
10
6
14
13
Fig. 9 The Effect of a Demand Shock
AS
Price Level
130
H
115
J
100
E
AD2
AD1
Real GDP( Trillions)
10
13.5
12.5
14
Fig. 10 The Long-Run Adjustment Process
Price Level
AS2
AS1
P4
K
J
P3
P2
H
P1
E
AD2
AD1
YFE
Y3
Y2
Real GDP
15
Fig. 11 Long-Run Adjustment After Negative Demand
Shock
Price Level
AS1
AS2
P1
E
P2
N
P3
M
AD1
AD2
Real GDP
YFE
Y2
16
Fig. 12 The Long-Run Adjustment Process
Long-Run AS Curve
Price Level
K
E
M
AD2
AD1
AD3
Real GDP
YFE
17
Fig. 13 The Effect of Supply Shocks
Long-Run AS Curve
Price Level
AS2
AS1
R
AS3
P2
P1
E
T
P2
AD
Real GDP
YFE
Y2
Y3
18
Fig. 14a An AD and AS Analysis of Two Recessions
(a)
AS1991
AS1990
R
P2
E
P1
AD1990
YFE
Y2
19
Fig. 14b An AD and AS Analysis of Two Recessions
(b)
AS2000
E
P2
R
P1
AD2000
AD2001
YFE
Y2
20
Fig. 15a/b GDP and the Price Level in Two
Recessions
The 1990-91 Recession
(b)
(a)
140
CPI
135
130
125
120
Year and Quarter
21
Fig. 15c/d GDP and the Price Level in Two
Recessions
The 2001 Recession
(d)
(c)
9.35
178
CPI
9.30
176
9.25
Real GDP ( Trillions)
9.20
174
9.15
172
9.10
20001
20011
Year and Quarter
22
Fig. 16 The Average Expansion Versus Two Recent
Jobless Expansions
Employment Index (Trough 1)
1.04
1.03
1.02
1.01
1.00
0.99
-6
-4
-2
0
2
4
6
8
10
12
Months Before and After the Trough