### Chapter 14: A Dynamic Model of Aggregate Supply and .

Chapter 14: A Dynamic Model of Aggregate Demand and Aggregate Supply 30/65 Y DAD t A Yt πt Longrun growth increases the natural rate of output. DAD t +1 B πt + 1 πt = DAD shifts because higher income raises demand for gs New eq'm at B, income grows but inflation remains stable. Yt + 1