AD-AS Model

AD-AS Model

The AD-AS or Aggregate Demand-Aggregate Supply model is a macroeconomic model that explains price level and output through the relationship of aggregate demand and aggregate supply. It is based on the theory of John Maynard Keynes presented in his work The General Theory of Employment, Interest, and Money. It is one of the primary simplified representations in the modern field of macroeconomics, and is used by a broad array of economists, from libertarian, Monetarist supporters of laissez-faire, such as Milton Friedman to Post-Keynesian supporters of economic interventionism, such as Joan Robinson.

The conventional "aggregate supply and demand" model is, in actuality, a Keynesian visualization that has come to be a widely accepted image of the theory. The Classical supply and demand model, which is largely based on Say's Law, or that supply creates its own demand, depicts the aggregate supply curve as being vertical at all times (not just in the long-run)

Read more about AD-AS Model:  Modeling, Aggregate Demand Curve, Slope of AD Curve, Effect of Monetary Expansion On The AD Curve, Aggregate Supply Curve, Fiscal and Monetary Policy Under Classical and Keynesian Cases, Shifts of Aggregate Demand and Aggregate Supply, Monetarism

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