This graph shows an aggregate demand curve and an aggregate supply curve for an economy with no exports or imports. Adjust the position of one or both curves to elucidate graphically the scenario described below.

Tool tip: To shift the aggregate demand or supply curves, place your mouse over any part of one of the curves, and then drag the curve up or down. Curves will snap into position, so if you try to move the curve and it snaps back to its original position, just try again and drag it a little further. When you are satisfied with your answer, click the Submit Answer button.

Labor productivity increases and spending on consumption, investment, and government stay constant.