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economics · education

Eastport Economy — AD-AS Model

This AD-AS example gives Eastport a compact macroeconomic model. Aggregate demand slopes down because lower price levels are associated with greater real expenditure in the model. Short-run aggregate supply slopes up because output can increase as prices and production incentives change in the short run. The vertical potential-output marker distinguishes sustainable capacity from the current equilibrium. The graph is useful for discussing demand shocks, supply shocks and inflationary or recessionary gaps. It deliberately simplifies a real economy: it does not estimate Eastport's actual GDP, inflation rate or policy response. Those require data, assumptions and a stated time period and a source.

Type econ-ad-asEngine econ-ad-asUpdated 9/24/2026
Eastport AD-AS Model
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The request

“Create an AD-AS graph titled Eastport AD-AS Model with aggregate demand intercept 14 and slope minus 1, short-run aggregate supply intercept 2 and slope 1, and potential output marked at 6.”

Then tryAdd an aggregate-demand increase.Label the vertical line LRAS.
What is in this drawing

Read the decisions behind it.

01Demand curve

represent planned spending.

02Supply curve

show short-run rising costs.

03Potential output

mark the productive-capacity reference.

Use this graph for high-level short-run macroeconomic explanations.

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FAQ

Common questions

What does AD represent?

Aggregate demand represents planned spending on an economy's output at different price levels.

What does SRAS represent?

Short-run aggregate supply represents output firms will produce at different price levels in the short run.

Why mark potential output?

It provides a reference for comparing the equilibrium level of output with productive capacity.