51.   On the one hand, the Keynesian version of the model assumes a constant price level and so cannot analyse the problem of inflation.

52.   Notice that since we have now introduced a flexible price level, it has become necessary to relabel the horizontal axis as real income.

53.   The AD curve shows the relationship between the price level and equilibrium real income.

54.   This means that in the long-run the level of real income will always be at the level associated with full employment, whatever the price level.

55.   If the price level should rise, the real wage would fall, creating an excess demand for labour.

56.   Similarly, if the price level should fall, the real wage would rise, creating an excess supply of labour.

57.   The equilibrium price level is OP and the equilibrium level of real income is OY f, the full employment level.

58.   Suppose that the economy is initially at the full employment level of income OY f and that the equilibrium price level OP prevails.

59.   Consequently, they argue, the effects of changes in the money supply will be largely on the general price level rather than on real output.

60.   AMD plans to continue to offer chips that either sell for less than similarly performing Intel chips or outperform Intel chips at the same price level.