10-32 Deriving the AD Schedule The AD schedule maps out the IS-LM equilibrium holding autonomous spending and the nominal money supply constant and allowing prices to vary Suppose price level increases from P 1 to P 2 M/P decreases from M/P 1 to M/P 2 LM shifts from LM 1 to LM 2 Interest rates increase from i 1 to i 2, and output falls from Y 1 to Y 2 Corresponds to lower AD [Insert Figure 10-13 here]
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