Context Chapter 9 introduced the model of aggregate demand and aggregate supply .ong run prices flexible output determined by factors of production technology unemployment equals its natural rate Short run prices fixed output determined by aggregate demand unemployment is negatively related to output CHAPTER 10 Aggregate Demand I slide 1CHAPTER 10 Aggregate Demand I slide 1 Context ▪ Chapter 9 introduced the model of aggregate demand and aggregate supply. ▪ Long run – prices flexible – output determined by factors of production & technology – unemployment equals its natural rate ▪ Short run – prices fixed – output determined by aggregate demand – unemployment is negatively related to output