Aggregate Demand and Aggregate Supply Quick review • Draw an AD & AS diagram to show the impact of an increase in government spending on national income and the price level in the UK economy. AD2 LRAS Price AD1 Level P2 P1 SRAS Y1 Y2 YFE Y • Draw an AD & AS diagram to show the impact of a recession in the Eurozone on the AD1 AD2 LRAS Price Level P1 P2 SRAS Y2 Y1 YFE Y Pause for thought? • When there is an injection in to the circular flow, how big is the increase in national income likely to be?
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