Untitled

Aggregate Supply (AS)
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|   / (This line is the Long-Run Aggregate Supply - LRAS, which is vertical)
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|/____________________________ Aggregate Demand (AD)

Explanation:
- The vertical line represents the idea that no matter where Aggregate Demand (AD) intersects it, the output (GDP) stays the same.
- If AD increases, you move up the LRAS line, indicating higher prices but the same output.
- If AD decreases, you move down the LRAS line, indicating lower prices but the same output.
Aggregate Supply (AS)
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|  ________ (This flat line is the Short-Run Aggregate Supply in a recession - horizontal SRAS)
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|/       / (This line represents the upward sloping SRAS of the modern Keynesian model)
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|/____________________________ Aggregate Demand (AD)

Explanation:
- The horizontal line represents the idea that when AD increases or decreases in a recession, only output changes, not the prices.
- The upward sloping line suggests that as AD increases, both prices and output go up.