AP®︎ Macroeconomics: Topic 3.5 Flashcards

Master key terms and definitions for Topic 3.5 of AP Macroeconomics – Equilibrium in the Aggregate Demand–Aggregate Supply (AD–AS) Model to help you prep for quizzes and the AP exam.

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Term

Short-Run Equilibrium in the AD-AS Model

Definition

Occurs where aggregate demand and short-run aggregate supply intersect at the current price level and real output.

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Short-Run Equilibrium in the AD-AS Model
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Occurs where aggregate demand and short-run aggregate supply intersect at the current price level and real output.

MOD-2.GMOD-2.G.1
Long-Run Equilibrium in the AD-AS Model
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Occurs where AD and SRAS intersect on LRAS at potential output and the full-employment price level.

MOD-2.GMOD-2.G.2
Full-Employment Output / Potential Output
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The level of real GDP produced when resources are fully employed, shown by the LRAS curve.

MOD-2.GMOD-2.G.2
Output Gaps
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The difference between actual real GDP and potential real GDP, which can be positive or negative.

MOD-2.GMOD-2.G.3
Inflationary Gap / Positive Output Gap
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When short-run equilibrium real GDP exceeds potential real GDP, placing output to the right of LRAS.

MOD-2.GMOD-2.G.3
Recessionary Gap / Negative Output Gap
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When short-run equilibrium real GDP is below potential real GDP, placing output to the left of LRAS.

MOD-2.GMOD-2.G.3