Aggregate Model (Traditional)

• Horizontal / Keynesian Range :
• there is a lot of unemployment resources or a constant price level as if in a recession
• Intermediate Range (SRAS) :
• resources are getting closer to Full Employment level, which creates an upward pressure on prices
• sticky wages can cause the AS curve to be positively sloped
• upward pressure on prices is caused by rising cost of doing business
• Vertical / Classical Range :
• real GDP is at a level with unemployment at Full Employment level, and where any increase in demand will result in increase of prices
• the unattainable region