Aggregate demand and aggregate supply graphs

  Draw the aggregate demand and aggregate supply graphs in a three-panel model: In the first graph, show aggregate demand on the graph and aggregate supply in the immediate short run. The second graph again shows aggregate demand, but this time shows aggregate supply in the short run. Finally, the last panel shows aggregate demand and aggregate supply in the long run. Be sure to label each axis and each curve in each graph. Discuss the following by referring to your graphs: 1) What are the determinants of aggregate demand and aggregate supply? 2) Why do the aggregate demand, aggregate supply (immediate short run), aggregate supply (short run), and aggregate supply (long-run) curves slope the way they do? Finally answer the question: What does it mean that in the long run, producers will make (and supply) all consumers want at any reasonable price.