Reduced demand from the world.


  • GDP* = potential GDP
  • LAS = Long-term Aggregate Supply
  • AD = Aggregate Demand



IS-LM diagram


  1. Surrounding world GDP↓ => X↓ => AD-shift

  2. No stimulus package.
    Wages adjusted downward => Production cost↓ => AS-shift down => P↓ => AD↑ , motion along the AD-function.


Extra stuff