Improving the Aggregate Demand/Aggregate Supply Model through an Illustration

February 28, 2023  |  Vol.9, No.2  |  PP. 107-118  | PDF

AUTHORS:

Kapje Park, Department of Economic and Finance, Kyungnam University, Korea

KEYWORDS:

AD/AS Model, IS/LM Model, Aggregate Demand Curve, Aggregate Supply Curve, Internal Consistency

Abstract

The purpose of this paper is to examine the problems of the aggregate demand/aggregate supply(hereafter, AD/AS) model that has been widely used to explain the business cycle in the introductory or medium level of the macroeconomics. Further, we review several solutions which have been provided in the related literature to takle the internal inconsistency problem inherent in the traditional approach to deriving the aggregate demand curve. According to the previous literature, there exists a contradiction between the supply behaviors of the firms underlying the AD curve and the AS curve. After reviewing the literature, this paper propose a simple mathematical form of the AD/AS model that can solve the problems and so be used in the macroeconomics class.

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References:

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Citations:

APA:
Park, K., (2023). Improving the Aggregate Demand/Aggregate Supply Model through an Illustration. Asia-pacific Journal of Convergent Research Interchange (APJCRI), ISSN: 2508-9080 (Print); 2671-5325 (Online), KCTRS, 9(2), 107-118. doi: 10.47116/apjcri.2023.02.09

MLA:
Park, Kapje, “Improving the Aggregate Demand/Aggregate Supply Model through an Illustration.” Asia-pacific Journal of Convergent Research Interchange, ISSN: 2508-9080 (Print); 2671-5325 (Online), KCTRS, vol. 9, no. 2, 2023, pp. 107-118. APJCRI, http://fucos.or.kr/journal/APJCRI/Articles/v9n2/9.html.

IEEE:
[1] K. Park, “Improving the Aggregate Demand/Aggregate Supply Model through an Illustration.” Asia-pacific Journal of Convergent Research Interchange (APJCRI), ISSN: 2508-9080 (Print); 2671-5325 (Online), KCTRS, vol. 9, no. 2, pp. 107-118, February 2023.

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