A survey of AS-AD models for teaching undergraduates at intermediate level

Publisher:
University of Queensland
Publication Type:
Journal Article
Citation:
Australasian Journal of Economics Education, 2009, 6 (1), pp. 52 - 81
Issue Date:
2009-01
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The Aggregate Supply-Aggregate Demand (AS-AD) model has been an important part of undergraduate teaching in economics for many years. It has, however, been the subject of recent criticism and new frameworks have been suggested to replace it. Given this antagonism, it seems a useful time to reflect on the AS-AD models suitability for teaching intermediate macroeconomics. A preliminary step in this process would be to provide a careful survey of AS-AD models used at this level. This paper surveys four common versions of the AS-AD model used in intermediate macroeconomics texts, considers the structure of these models, and carefully analyses their adjustment dynamics for negative demand and supply shocks. It argues that incorporating more than one of the approaches considered into intermediate classes would provide students with a better understanding of the state of economics and would enhance their critical skills by requiring them to understand the similarities and differences between the different approaches.
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