The illustration is titled Chapter at a glance.

The first graph depicts the A D A S framework and plots quantity of output against price level. An arrow points to the horizontal axis and reads, Real G D P and an arrow points to the vertical axis and reads G D P deflator. It shows an upward-sloping aggregate supply curve and the accompanying text reads, ellipsis shows the quantity of output that sellers collectively produce rises as the average price level rises. The aggregate demand curve is downward-sloping and the accompanying text reads, ellipsis shows the quantity of output that buyer collectively plan to purchase falls as the average price level rises. The point of intersection of the curves is labeled macroeconomic equilibrium and the accompanying text reads, ellipsis where the two curves intersect. It’s where the economy is headed.

The text reads, Forecasting Macroeconomic Outcomes.

1. Is there a shift in aggregate demand or aggregate supply?

2. Is that shift an increase, shifting the curve to the right? Or is it a decrease, shifting the curve to the left?

3. How will the price level and quantity of output change in new equilibrium?

The graph plots quantity of output against price level and shows an upward-sloping aggregate supply curve and downward-sloping aggregate demand curve that intersect. Arrows indicate the shifts in the aggregate supply curve to the left and right corresponding to an increase and decrease in production costs, respectively. The accompanying text reads, ellipsis shifts in response to changes in production costs

1. Input prices

2. Productivity

3. The exchange rate

Arrows also indicate the shifts in the aggregate demand curve to the left and right corresponding to an increase and decrease in aggregate expenditure, respectively. The accompanying text reads, ellipsis shifts in response to changes in aggregate expenditure

1. Consumption (C)

2. Planned investment (I)

3. Government purchases (G)

4. Net Exports (N X)

The next text segment is titled Monetary and Fiscal Policy and reads as follows:

Expansionary fiscal or monetary policy shift the A D curve to the right.

The quantity of output rises and so does the price level.

An inflation-induced cut in interest rates will not shift aggregate demand. Other interest rate cuts will.

Multiplier effect: An initial burst of spending will ripple through the economy, leading to an even larger boost of output.

The last segment of the illustration shows graphs titled From the very short run to the long run.

The first graph plots output against price when prices are fixed and shows a horizontal line representing the A S curve. The second graph plots output against price for partial price adjustment and shows a downward-sloping A S curve. The third graph plots output against price for more price adjustment and shows a steep downward-sloping A S curve. The fourth graph plots output against price for complete price adjustment and shows a vertical line representing the A S curve.

The text above the set of graphs read, Very short run (a few weeks) followed by Short run (a few months) followed by Medium run (a year or two) followed by Long run (several years or more).