Theory-Based Models
Theory-Based Models
Theory-Based Models
A short-run demand and supply framework showing how price level and output move when demand or cost conditions shift around long-run capacity.
Theory-Based Models
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Scenario
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Shifts AD outward.
Raises the SRAS intercept and worsens the tradeoff.
Raises potential output.
Short-run equilibrium
Output
93.0
Price level
90.6
Long-run gap
0.0
Potential output
93.0
Impact summary
The current AD-AS setup lands at output 93.0 with a price level of 90.6.
The current position sits at or below long-run capacity, so slack remains visible in the diagram.