Aggregate Supply and Aggregate Demand

  I.            Very informative video

II.            Equilibrium of AS (SRAS) & AD determines current output and the price level.

III.            The x- coordinate of the equilibrium is LRAS which is also full employment.

IV.            Inflationary Gap: Output is high and unemployment is less than NRU (Natural rate of employment). Actual GDP is above potential GDP.

V.            Recessionary Gap is the exact opposite.