2.1. In Figure 2 above, what are the factors that may cause the aggregate demand to shift from AD to AD1? What is the difference between demand pull inflation, cost push inflation and recession? 2.2....

2.1. In Figure 2 above, what are the factors that may cause the aggregate demand to shift from AD to AD1? What is the difference between demand pull inflation, cost push inflation and recession?

2.2. In macroeconomics, the immediate short run is known as a length of time when both input prices and output prices are fixed. In the short-run, input prices are fixed but output prices are variable. In the long run, input prices and output prices can vary.

• Describe the AS curve in the Immediate Short run.

• Describe the AS curve in the Short run.

• Describe the AS in the Long run.

Extracted text: Figure 2: Keynes's AD-AS Model The Keynesian AS curve Price Level AS Up to real output level Yf increases in AD have no effect on the price level. Increases in AD beyond Yf cause an increase in the price level but no increase in real output. p1 AD2 AD AD1 National income (real GDP) Ye Yf Copyright: www.economicsonline.co.uk