In Figure 10.2: Figure 10.2 Graph - Downward sloping curve AD2 is to the right of downward sloping curve AD1; arrow points from AD1 to AD2; upward sloping AS curve intersects AD1 at Y1P1 and AD2 at Y2P2 In Figure 10.2: the steepness of the aggregate supply curve determines how much inflation will materialize in the economy a flatter aggregate supply curve will cause more inflation in the economy a decrease in aggregate demand slows down the economy causing unemployment to decrease an increase in aggregate demand causes an increase in inflation and a decrease in the rate of growth of GDP