Do you believe that the Hayek's classical AD-AS model explains the factors that cause changes (shifts) in AS realistically? Why or why not?
Figure 2: Keynes' AD-AS Model
The Keynesian AS curve
Up to real output level, increases in AD have no effect on the price level. Increases in AD beyond YI cause an increase in the price level but no increase in real output.
Economics Online: (n.d.) Aggregate supply. Retrieved from http://www.economicsonline.co.uk/Managing_the_economy/Aggregate_supply.html
2.1. Changes in which factors could cause aggregate demand to shift from AD to ADI? What could happen to the unemployment rate? What could happen to the inflation rate?
2.2. The Keynesian AD-AS model describes what happens with price levels when aggregate demand increases. Could you find any evidence from the last ten-fifteen years that might support AD-AS model descriptions of demand-pull inflation, cost-push inflation, and recession? For example, you could find data on the GDP of any two countries from 2000 to 2017 to support your findings.