Week 5 Model Workshop: Two Shocks, One Economy

Part 1 — The Big Picture

This week you learned to read the whole economy on one diagram: aggregate demand sloping down, short-run aggregate supply sloping up, and the crossing that sets the price level and real output. In this workshop you build the model for a small inland economy, hit it with two different shocks, and watch what each one does. One shock comes from buyers and one from firms' costs. Both raise the price level, but they push real output in opposite directions, and that difference is how you tell a demand story from a supply story. Then you sort a short news brief into what the model can test and what rests on values, and you check a chatbot's reading of the same economy.

Time budget: Plan for about 90 minutes.

Part 2 — The Task

Guiding question: Where does the inland economy's price level and real output settle, and how do an export boom and an input-cost shock move them differently?

Workshop data: An illustrative inland economy's AD–AS lines

Source: Two straight lines for an illustrative inland economy, one for aggregate demand and one for short-run aggregate supply, plus two shocks, constructed for this workshop and printed in full in Part 4; it is not real data and describes no real place or person.

• Rows: 1 economy described by 2 lines and 2 shocks; the crossings table in Part 4 has 3 rows, the events table has 4 rows, and the news-brief table has 4 rows
• Lines: aggregate demand P = 45 − Y⁄20 and short-run aggregate supply P = 15 + Y⁄20, with Y in billions of dollars of real output and P an index
• Shocks: an export boom that moves aggregate demand to P = 49 − Y⁄20, and an input-cost shock that moves short-run aggregate supply to P = 19 + Y⁄20

Part 3 — Materials & Procedure

Tools and materials

• Desmos (free) or Google Sheets (free)
• A document or notebook for your written answers

Ways of working

• read-and-compute-from-macro-data
• build-and-shift-the-ad-as-model
• separate-positive-from-normative-claims

Procedure

1. Open the free Desmos graphing calculator in a browser, or a blank sheet in Google Sheets. In Desmos, type y=45-x/20 on the first line and y=15+x/20 on the second; x stands for real output Y and y stands for the price level P. Tool: Desmos (free) or Google Sheets (free). Check: Desmos draws one line falling from left to right and one rising; click where they cross to see the crossing's label.
2. Record the starting crossing in the first table in Part 4, writing out the step that sets the two lines equal and the division that gives Y, then the price level on each line. Tool: Desmos (free) or Google Sheets (free). Check: The first row of the crossings table holds Y, P, and a check on the second line.
3. In Desmos, change the first line to y=a-x/20 and choose add slider for a. Set a to 45, then drag it slowly to 49. In Google Sheets, type outputs from 200 to 400 in steps of 20 in column A, then type =45-A2/20 in B2, =15+A2/20 in C2, and =49-A2/20 in D2, and copy them down. Tool: Desmos (free) or Google Sheets (free). Check: The crossing walks up and to the right along the unchanged supply line, or the rows where column C equals column B and then column D show the two crossings.
4. Set a back to 45. Change the second line to y=b+x/20, add a slider for b, set it to 15, and drag it slowly to 19. In Google Sheets, add =19+A2/20 in E2 and copy it down. Tool: Desmos (free) or Google Sheets (free). Check: The crossing slides up and to the left along the unchanged demand line; record it in the third row of the crossings table.
5. With both sliders back at 45 and 15, type (200,35) on a new line in Desmos, or find the row where column B equals 35 in Google Sheets. Then complete the events table in Part 4: for each event, say whether it is a movement along a curve or a shift, which curve and which way, and what happens to P and Y. Tool: Desmos (free) or Google Sheets (free). Check: The point sits on the starting demand line, and every row of the events table holds a label, a curve and direction where one applies, and the effect on P and Y.
6. Read the news brief in the third table of Part 4. Label each sentence positive or normative, and write either the evidence or model result that could test it or the value it rests on. Tool: Desmos (free) or Google Sheets (free). Check: All four news-brief rows are labelled, each with a test or a value beside it.

Fallback route

When to use it: Use this route if neither Desmos nor Google Sheets will open, or a formula will not run.

Work every step by hand from the lines printed in Part 4: set each pair of lines equal, solve for Y, find P on one line and check it on the other, and sketch the lines on paper with the axes labelled in words. Complete every table, analysis question, and the critique step, and submit the same items for equal credit.

This route earns the same credit as the primary route.

Part 4 — The Scaffold

Find each crossing by setting the two lines equal, then check the price level on the second line.

Student scaffold table 1

Situation	Lines set equal and solved for Y	Real output Y	Price level P	Check on the other line
Starting lines
After the export boom
After the input-cost shock

Sort each event into a movement along a curve or a shift, so you never draw a price-level change as a shift.

Student scaffold table 2

Event	Movement along or shift	Which curve and which way	What happens to P and Y
The price level is 35 with nothing else changed
Exports rise
Fuel and other input costs rise
A new technology lets each worker produce more

Sort the news brief so the testable claims are kept apart from the value judgments.

Student scaffold table 3

News-brief sentence	Positive or normative	Evidence or model result that could test it, or the value it rests on
Exports rose this year, and the price level climbed from 30 to 32.
If input costs rise, the model predicts a higher price level and lower real output.
The government should cap fuel prices to protect families.
Rising prices are a worse problem than falling output.

Part 5 — Analysis Questions

1. Write the steps that give all three crossings, and say each one in a full sentence with its real output and price level.
2. Both shocks raised the price level by the same amount. What happened to real output in each case, and which rule from this week explains the difference?
3. If the price level were 35 with nothing else changed, how much real output would buyers want, and why is that a movement along the demand curve rather than a shift?
4. Choose one: (a) a headline says prices rose while factories cut shifts; explain which of your two shocks the headline matches and what evidence would confirm it; or (b) name the news-brief sentence that was hardest to sort, and explain what made it hard and how you decided.
5. This workshop's lines are straight and do not show where long-run aggregate supply stands. Name one way this simple model could mislead you about a real economy, and say what you would want to know before trusting its prediction.

Part 6 — AI-Critique Moment

Choose one equal-credit critique route. Route A: ask an approved AI tool to critique your completed work, then check its response against your own evidence. Route B is the no-AI equivalent printed below.

Approved tools: Claude, Gemini, ChatGPT, Grok, Microsoft Copilot.

Prompt to paste:

I've pasted my completed Week 5 Model Workshop tables above. They describe an illustrative inland economy constructed for a class activity, not real data. Real output Y is in billions of dollars of real GDP and the price level P is an index. Aggregate demand is P = 45 − Y⁄20 and short-run aggregate supply is P = 15 + Y⁄20. Please do six things. First, find the short-run equilibrium, the real output Y and price level P where the two lines cross. Second, exports rise and aggregate demand becomes P = 49 − Y⁄20; find the new crossing and say which curve moved and which way. Third, starting again from the original lines, an input-cost shock makes short-run aggregate supply P = 19 + Y⁄20; find the new crossing and say which curve moved and which way. Fourth, if the price level were 35 instead of the starting level, with nothing else changed, would the aggregate demand curve shift, and how much real output would buyers want? Fifth, sort these four sentences into positive and normative statements: (1) Exports rose this year, and the price level climbed from 30 to 32. (2) If input costs rise, the model predicts a higher price level and lower real output. (3) The government should cap fuel prices to protect families. (4) Rising prices are a worse problem than falling output. Sixth, after the input-cost shock the price level rose, so tell me whether the economy's output grew in dollar terms, and, as a stretch question for later in the course, how much more output the export boom would create once a money multiplier of 1 divided by a reserve ratio of 0.1 is applied.

Test the response for these likely failures:

• Chatbots often say a higher price level shifts aggregate demand to the left, or describe the export boom as a movement along the demand curve.
• Chatbots often multiply the price level by output, or reason that because prices rose the economy's output grew, treating a price change as a change in real output.
• Asked how far the export boom multiplies, chatbots often apply a banking formula such as 1 divided by a reserve ratio, or invent a multiplied output figure.
• Chatbots often call a model prediction such as sentence 2 normative because it sounds like a policy argument, or call sentence 4 positive because it sounds like a fact.

Write 3–5 sentences naming one thing the chatbot got right and at least two places it went wrong or overreached, quoting its words and correcting each with evidence from your own tables or this week's chapter.

Equivalent route (no AI required)

No AI account is required for this workshop. Instead of the chatbot, critique this flawed analysis, printed here in full: "The two lines cross at a real output of 300 and a price level of 30. When exports rise, the price level goes up, so buyers want less and aggregate demand shifts left. The input-cost shock moves aggregate demand to the left too, because people buy less when costs rise. After the shock the price level is 32 instead of 30, so the economy's output grew in dollar terms. Sentence 2 of the news brief is normative, because it is about policy. With a multiplier of 1 divided by a reserve ratio of 0.1, the export boom adds ten times as much output." Mark it up: quote each flawed sentence, name what is wrong (a price-level change read as a shift, a supply shock read as a demand shift, a price rise read as growth in real output, a positive prediction labelled normative, or an invented multiplier figure), cite the evidence from your tables or the chapter, and write a corrected sentence beneath it; for the multiplier claim, say which later week of the course takes it up and that no such figure can come from these data. This route assesses the same objectives (Objective 2 and Objective 5) as the chatbot critique, takes comparable effort (about 30 minutes and 200–300 words), is scored by the same scoring criteria for the same credit, and its own submission artifact is the marked-up flawed analysis, posted in place of the chatbot share link and report.

Part 7 — What to Submit

• All three completed scaffold tables
• Written answers to all five analysis questions
• A labelled sketch, or a description in words, of the two shocks on the diagram
• The chatbot critique report with its share link, or the equivalent route's marked-up flawed analysis

Deliverable:

A short Model Workshop report on an illustrative inland economy: three completed tables (the three crossings, the four events sorted into movements and shifts, and the sorted news brief), a sketch or word description of the two shocks on the diagram, written answers to five analysis questions, and a critique of a chatbot's analysis of the same economy, or, on the equivalent route, a marked-up correction of the printed flawed analysis. Submit in any accessible file type or as a link; a recorded response may be submitted as audio or video with a transcript, or as text. Choose a written, recorded, or visual form for your answers; every form is graded by the same scoring criteria.

Rubric

The rubric below shows how each submitted part is evaluated; bands are full, partial, or none.

Workshop evaluation criteria

Criterion	Full	Partial	None
Solving the three crossings	All three crossings are correct, each with the lines set equal, the division for Y, and the price level checked on the second line, and each is said in a full sentence.	The crossings are attempted, but one value is wrong, a check is missing, or a crossing is reported without its price level.	No crossing is found, or values are invented rather than computed.
Movement along versus shift	The price-level change is labelled a movement along the demand curve with the output buyers want, and every other event names the curve that shifts and its direction.	Most events are sorted correctly, but the price-level change is called a shift or one curve or direction is wrong.	The events are not sorted, or every change is treated as a shift.
Together versus apart after each shock	The response shows that the export boom raised both P and Y while the input-cost shock raised P and lowered Y, and names the rule that a demand shift moves them together and a supply shift moves them apart.	Both shocks are described, but the comparison of real output is missing or the rule is not stated.	The two shocks are not compared, or P and Y are said to move the same way after the supply shock.
Sorting positive and normative statements	All four news-brief sentences are labelled correctly, each with a fitting test or value, and the chosen reflection option is answered with the model's prediction kept apart from any value judgment.	Most sentences are labelled correctly, but one is wrong, a test or value is missing, or the reflection blurs the two kinds of claim.	The sentences are not sorted, or positive is treated as meaning good and normative as meaning bad throughout.
Critiquing the AI analysis or the printed flawed analysis	The chatbot's analysis, or on the equivalent route the printed flawed analysis, is quoted and at least two errors are corrected with evidence from the tables or the chapter, including any multiplier or dollar claim flagged as outside these data.	The critique names errors but corrects only one, or corrects without evidence, on either route.	No critique is submitted on either route, or the AI output or flawed analysis is accepted without checking.
Naming the limitation of the model	The response names a specific way the simple straight-line model could mislead about a real economy and says what further information would be needed.	A limitation is named but not connected to what would be needed to trust the prediction.	No limitation is named.

Quality Gate

• Every crossing comes from your own algebra, formula, or hand work, never from memory or a chatbot.
• Each crossing's price level is checked on both lines.
• The price-level change in the events table is labelled a movement along a curve, not a shift.
• Each shock names the curve that moved, its direction, and what happened to P and Y.
• All four news-brief sentences carry a label and either a test or a value.
• No statistic, price, dollar figure, multiplier, or source is invented anywhere in the submission.
• The critique quotes the chatbot or the flawed analysis and corrects at least two errors with evidence from your tables or the chapter.