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  • I-P Curve Adjustment Process

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    Ahnaph Rafin
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    This document discusses the adjustment process of an economy moving from one price level to another. It involves a shift in the aggregate demand curve from AD0 to AD1 as the price level changes from P0 to P1. During the adjustment process, real GDP moves along the aggregate demand curve from Y0 to Y1 as the price level rises from P0 to P1.

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    This document discusses the adjustment process of an economy moving from one price level to another. It involves a shift in the aggregate demand curve from AD0 to AD1 as the price level changes from P0 to P1. During the adjustment process, real GDP moves along the aggregate demand curve from Y0 to Y1 as the price level rises from P0 to P1.

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    I-P Curve Adjustment Process

    Uploaded by

    Ahnaph Rafin
    This document discusses the adjustment process of an economy moving from one price level to another. It involves a shift in the aggregate demand curve from AD0 to AD1 as the price level changes from P0 to P1. During the adjustment process, real GDP moves along the aggregate demand curve from Y0 to Y1 as the price level rises from P0 to P1.

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    ί-P Curve: The Adjustment Process

    LM at P0
    LM at P1

    ί0
    ί1

    Ā
    Po P1 P2 P3
    1̶ c (1̶ t)
    Ā } over { 1 ̶ c (1 ̶ t) ¿

    − ( 1h x PḾ0 )

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