After studying this topic, you should be able to understand
The aggregate demand curve charts out the IS–LM equilibrium while holding the nominal money supply and autonomous expenditures constant but allowing the prices to change.
Shifts in the IS curve or the LM curve lead to shifts in the aggregate demand curve.
Shifts in the IS and LM curves occur due to changes in the monetary or fiscal policy.
According to the classical approach, the short-run aggregate supply curve is vertical.
According to the Keynesian approach, the short-run aggregate supply curve is horizontal.
It has also been put forward that the short-run aggregate supply curve is upward sloping.
The intersection of the aggregate demand ...