- DAD-SAS model
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The DAD-SAS model is a macroeconomic model based on the AD-AS model but that looks at the different incomes at different inflation levels.
DAD curve
The DAD (Dynamic aggregate demand) curve is in the long run a horizontal line called the EAD (Equilibrium aggregate Demand) curve. The short run DAD curve at flexible exchange rates is given by the equation:
The short run DAD curve at fixed exchange rates is given by the equation:
SAS curve
The SAS (Surprise aggregate supply) curve is in the long run a vertical line called the EAS (Equilibrium aggregate Supply) curve. The short run SAS curve is given by the equation:
π = πe + λ(Y − Y * )
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