Working with the Aggregate Supply and Aggregate Demand Model

John Maynard Keynes believed there were times when the government had to intervene in the economy to shift the AD curve either to the right or to the left depending upon the macroeconomic problem the nation was facing. The problems that could be creating demand or supply shocks to the economy result in excessive unemployment, too much inflation, a recession or rapid expansion. The cause could be a pandemic, a world war, a terrorist attack, a stock market crash, a real estate boom, problems with major suppliers of inputs to production, etc.

There are a number of good videos on Youtube explaining the ADAS model. I really like Mr. Clifford. He has some good interactive videos helping you identify what causes each curve to shift, what direction it shifts and how it affects the Macro-economy. Shifts in the short run aggregate supply curve SRAS are a little harder to grasp they generally involve changes in technology, input prices such as labor and oil, natural conditions or natural disasters, government policies such as tariffs and environmental regulation.

After carefully reviewing the resources provided for Chapter 7 and Chapter 8, including the ADAS Youtube Videos, find an article about a situation that caused a shift in either AD or AS. You can go back through history and may want to start by researching recessions in the past and what caused them. OR periods of rapid GDP growth and what caused that. Everyone must find a unique example, meaning a different year that no one else has reported on.

Remember to think about the BIG picture and not make this into a basic supply and demand exercise.

Include a link to your source of information and your opinion on what kind of a shift was going on.