The complete AD/AS suite. Build every diagram step by step, then hit the model with real-world shocks and watch the price level and real GDP respond.
Each part has a diagram guide, a live explorer, tell me why questions and a quick check. Use the Present button on any part to run it on the board as slides.
Aggregate demand is the total planned spending on an economy’s goods and services at a given price level, in a given time period.
👆 Tap a component to see real-world examples.
A fall in the price level increases the quantity of real output demanded. Three effects explain this:
Choose an event. Watch AD respond, read the chain of reasoning, and check what happens to the price level and real GDP.
When government spending rises by £10bn, that money becomes someone’s income. They spend part of it (their marginal propensity to consume) and the rest leaks out as saving, taxes and imports (withdrawals). Each round of spending creates further income — so the final increase in real GDP is larger than the initial injection.
Equivalently, 1 ÷ marginal propensity to withdraw. The bigger the leakages, the smaller the multiplier.
Short-run aggregate supply shows the total planned real output that firms are willing to supply at each price level, in a period when the prices of factors of production — especially money wages — are fixed or slow to change.
AD is held constant so you can isolate the supply side. Notice that SRAS shifts move the price level and real GDP in opposite directions.
Long-run aggregate supply shows the maximum real output an economy can produce when all its factors of production are fully and efficiently employed — its productive potential, or full-employment output (Yfe).
AD is held constant. When productive potential changes, the new long-run equilibrium is where AD meets the new LRAS (SRAS adjusts with it).
Tick off each item against your last diagram. Full diagram marks need all eight.
Tap the links in the correct order to build a full chain of reasoning. Tap a placed link to send it back.