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The article discusses inflation, which is a key variable in the AD-AS model. The model analyzes how changes in aggregate demand and aggregate supply affect
The article discusses inflation, which is a key variable in the AD-AS model. The model analyzes how changes in aggregate demand and aggregate supply affect both inflation and total output. A soft landing refers to a scenario where the Fed can control inflation (reduce aggregate demand) without causing a recession (a decrease in total output). This is a central challenge analyzed by the AD-AS model. The role of the Fed, which influences aggregate demand through its monetary policy decisions (interest rates). The AD-AS model explicitly incorporates the impact of these decisions. While other models like the Monetary Model are also relevant for understanding inflation and interest rates, the AD-AS model provides a more comprehensive framework for analyzing how these factors interact with total output and achieving a soft landing
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