Work through the list without notes. If you cannot do a statement, follow its link, then come back. Guide = study guide; Practice = practice questions.
Understanding
- I can define short-run equilibrium as the point where the aggregate quantity of output demanded equals the quantity supplied, where AD crosses SRAS. (Guide: “Short-run equilibrium”; Practice Q1)
- I can explain how unplanned changes in inventories push the price level and output towards equilibrium from above or below. (Guide: “Short-run equilibrium”; Practice Q2, Q5(b))
- I can state the extra condition for long-run equilibrium: AD and SRAS cross on LRAS, at Yf. (Guide: “Long-run equilibrium”; Practice Q7(c))
- I can explain why a short-run equilibrium need not be at full employment. (Guide: Worked example 2; Practice Q4)
Skills
- I can find the equilibrium price level and real output from AD and SRAS schedules. (Guide: Worked example 1; Practice Q5(a))
- I can calculate a surplus or shortage of output at a price level away from equilibrium. (Guide: Worked example 1; Practice Q5(b))
- I can calculate an output gap in money terms and as a percentage of Yf, with the correct sign. (Guide: Worked example 2; Practice Q5(c), Q7(a)–(b))
- I can draw a correctly labelled AD–AS graph showing long-run equilibrium or a negative or positive output gap. (Guide: Figures 1–2 and “How to draw an AD–AS equilibrium graph”; Practice Q6(a))
Reasoning
- I can link the position of short-run equilibrium relative to LRAS to unemployment above, at or below the natural rate. (Guide: “Output gaps”; Practice Q3, Q5(d), Q7(b))
- I can work out full-employment output from unemployment data and the natural rate. (Practice Q7(a))
- I can explain why a positive output gap is called inflationary and why it cannot last. (Guide: “Output gaps”; Practice Q6(c))
All ticked? Move on to the changes in the AD–AS model in the short run study guide, or return to the course roadmap.