In order for a macroeconomic model to be useful, it needs to show what determines total supply or total demand for the economy and how total demand and total supply interact at the macroeconomic level. This model is called the aggregate...

By the end of this section, you will be able to do the following: Explain the aggregate supply curve and how it relates to real GDP and potential GDP, Explain the aggregate demand curve and how it is influenced by price levels, Interpret...

This section provides three problems to solve to aid in the understanding of the content of Chapter 10: The Aggregate Demand/Aggregate Supply Model from the Texas Gateway AP Macroeconomics online text.

By the end of this section, you will be able to do the following: Explain the importance of potential GDP in the long run, analyze the role of flexible prices, interpret a neoclassical model of aggregate demand and aggregate supply, and...