Guided graph mode
Trace the shock, one step at a time
The AP exam does not just want the final graph. It wants the chain: a shock hits, a curve shifts, that changes an outcome, and sometimes the economy adjusts again on its own. Step through each event below and watch the graph move exactly as your written answer should, one labeled step at a time.
Build a class activityTea Gets Pricier
Supply and DemandA jump in the price of tea (a substitute) shifts demand for coffee right to a new equilibrium.
Equilibrium at Quantity 57, Price ($) 44
Step 1 of 4
Start in equilibrium
The market for coffee begins in equilibrium where supply and demand cross. At this price there is no shortage and no surplus, so price and quantity have no reason to change.
Now try it yourself: shift the curves in a graded FRQ drill, or open this graph in the free sandbox.
Every walkthrough
75 shocks traced end to end. Each has its own page with the full causal chain written out, then the same shock to draw yourself.
- Tea Gets PricierA jump in the price of tea (a substitute) shifts demand for coffee right to a new equilibrium.
- Both Curves Shift: LaptopsRising incomes and better production technology both push the laptop market right, so quantity clearly rises but the price change is ambiguous.
- Output Price Rises, So Does Labor DemandA higher price for the firm's product lifts marginal revenue product, shifting labor demand right.
- More Workers Enter, Wage FallsAn increase in the number of available workers shifts labor supply right, lowering the wage and raising employment.
- Negative Demand Shock and Long-Run Self-CorrectionA fall in aggregate demand causes a recession, then falling wages restore full employment at a lower price level.
- Positive Demand Shock and Long-Run Self-CorrectionA surge in aggregate demand overheats the economy, then rising wages return output to full employment at a higher price level.
- Adverse Supply Shock and the Stagflation DilemmaA sudden rise in input costs shifts SRAS left, causing stagflation and a policy dilemma with no clean fix.
- Expansionary Policy: The Fed Buys BondsThe central bank buys bonds, money supply rises, and the nominal interest rate falls, boosting spending.
- Contractionary Policy: The Fed Sells BondsThe central bank sells bonds or raises reserves, money supply falls, and the nominal interest rate rises to cool spending.
- Crowding Out: Government Deficit BorrowingA large government deficit borrows in the loanable funds market, raising the real interest rate and crowding out private investment.
- A Rise in National SavingHigher national saving shifts the supply of loanable funds right, lowering the real interest rate and raising investment.
- Expansionary Policy: Short Run vs Long RunStimulus buys lower unemployment now, but only higher inflation in the long run.
- Falling Inflation ExpectationsWhen people expect less inflation, the short-run tradeoff improves.
- US Interest Rates Rise: The Dollar AppreciatesHigher US interest rates pull in foreign investors, raising demand for dollars and appreciating the dollar.
- Higher US Inflation: The Dollar DepreciatesHigher US inflation pushes Americans toward foreign goods, increasing the supply of dollars and depreciating the dollar.
- Coffee Beans Get ExpensiveA rise in the cost of an input shifts supply left, raising price and cutting quantity.
- Printers Get Pricier, Ink SuffersA rise in the price of a complement shifts demand left, lowering both price and quantity.
- An Excise Tax on SellersA per-unit tax shifts supply left by the amount of the tax, raising the price buyers pay and cutting quantity.
- A Subsidy to SellersA per-unit subsidy shifts supply right, lowering the price buyers pay and raising quantity.
- Drought Hits the Wheat CropA weather shock shifts supply left, raising price and cutting quantity, with revenue depending on elasticity.
- New Sellers Enter the MarketMore firms in the market shifts supply right, lowering price and raising quantity.
- A Recession Lifts an Inferior GoodFalling income raises demand for an inferior good, so price and quantity both rise.
- Buyers Expect Prices to RiseAn expected future price rise shifts demand right today, raising price and quantity now.
- Both Curves Shift: Price Is Certain, Quantity Is NotDemand rises while supply falls, so price definitely rises but quantity is indeterminate.
- A Recession Hits a Normal GoodFalling income shifts demand for a normal good left, so price and quantity both fall.
- Corn Pays Better Than SoybeansCorn prices jump, so farmers move acreage out of soybeans and the soybean supply curve shifts left.
- A Beef Boom Hits the Leather MarketRanchers raise more cattle for beef, and because hides come with the beef, the supply of leather shifts right.
- A Town's Population GrowsThousands of new residents move into a region, increasing the number of buyers and shifting housing demand right.
- The Fad FadesTastes turn against a once-trendy product, so demand shifts left and the market shrinks.
- New Safety Rules Raise CostsA regulation forces added testing on every unit produced, raising per-unit costs and shifting supply left.
- Both Curves Shift: Patio FurnitureA recession pushes demand for a normal good left while a cheaper input pushes supply right, so price clearly falls but quantity is indeterminate.
- A Housing Boom and the Wealth EffectRising home values make households wealthier, so consumer spending rises and AD shifts right, which is a shift of AD rather than a movement along it.
- A Strong Dollar Opens a Recessionary GapAn appreciating dollar cuts net exports, shifting AD left and opening a recessionary gap.
- World Oil Prices CollapseA collapse in world oil prices cuts production costs, shifting SRAS right so the price level falls and real GDP rises.
- Wages Rise Across the EconomyAn economy-wide rise in nominal wages raises production costs, shifting SRAS left and producing cost-push inflation.
- Long-Run Growth: Capital and TechnologyBetter technology and more capital raise productivity, shifting LRAS and SRAS right together so output rises and the price level falls.
- An Income Tax Cut Lifts ConsumptionLower income taxes raise disposable income and consumer spending, shifting AD right and opening an inflationary gap.
- Drought Destroys Productive CapacityA multi-year drought destroys resources, shifting LRAS and SRAS left together so the price level rises and potential output itself falls.
- Investment Tax Credit: The Real Rate RisesA tax credit on new capital raises the after-tax return to investing, shifting the demand for loanable funds right and pushing the real interest rate up.
- Budget Surplus: The Real Rate FallsThe government collects more in taxes than it spends, adding public saving to the market, so supply shifts right and the real interest rate falls.
- Capital Inflows: Foreign Savers Buy InSaving from abroad flows into domestic bonds, adding to the supply of loanable funds and pulling the real interest rate down.
- A Downturn Sinks Expected ProfitsFirms expect weak profits from new capital, so fewer projects are worth financing: the demand for loanable funds falls and the real interest rate drops.
- A Consumer Spending BoomHouseholds spend more and save less at every real interest rate, so the supply of loanable funds shifts left and the real interest rate climbs.
- Capital Flight: Foreign Savers Pull OutForeign investors lose confidence and move their saving abroad, shrinking the supply of loanable funds and driving the real interest rate up.
- Foreign Tastes Turn From US Goods: The Dollar DepreciatesForeign consumers lose their taste for American-made goods, so they buy fewer dollars to pay US sellers, shifting demand left and depreciating the dollar.
- US Incomes Rise: The Dollar DepreciatesRising American incomes pull in more imports, Americans supply more dollars to pay for them, and the dollar depreciates.
- Foreign Rates Rise: The Dollar DepreciatesHigher interest rates abroad send American investors after foreign bonds, so they supply more dollars to buy foreign currency and the dollar depreciates.
- Speculation Alone: The Dollar AppreciatesTraders expecting a stronger dollar next quarter buy dollars today, shifting demand right and making the expected appreciation happen immediately.
- Inflation Abroad: The Dollar AppreciatesHigh inflation abroad makes US goods relatively cheap, foreign buyers demand more dollars to buy US exports, and the dollar appreciates.
- Reserve Requirement Cut, Rates FallHalving the required reserve ratio doubles the deposit multiplier, so the same reserves support twice the deposits: MS shifts right and the nominal interest rate falls.
- Real Incomes Rise, Rates FollowHigher real income means more transactions, so money demand shifts right against an unchanged money supply and the nominal interest rate rises.
- Payment Technology Cuts the Cash People HoldInstant payment apps let people settle transactions holding less money, so money demand shifts left and the nominal interest rate falls.
- Oil Shock: Stagflation ArrivesAn oil price spike shifts the short-run Phillips curve up and to the right, so every unemployment rate now comes packaged with higher inflation.
- A Favorable Supply ShockCheaper energy and faster productivity growth shift the short-run Phillips curve down and to the left, so inflation is lower at every unemployment rate.
- Structural Change Raises the Natural RateAutomation and a skills mismatch raise structural unemployment, shifting the long-run and short-run Phillips curves right together.
- Credible Central Bank, Cheap DisinflationA believed inflation target brings inflation down with almost no rise in unemployment, while the same target costs a recession when nobody believes it.
- Worker Training Raises Wages and EmploymentA training program raises marginal product, so the marginal revenue product of labor rises and labor demand shifts right, lifting the wage and employment.
- Cheaper Automation Pushes the Wage DownMachines become a cheap substitute input, so firms want fewer workers at every wage and labor demand shifts left.
- Households Buy Less of the ProductConsumers stop buying the good these workers make, so the output price falls, marginal revenue product falls with it, and labor demand shifts left.
- A Rival Industry Bids Workers AwayA competing industry raises its pay, workers leave this market, labor supply shifts left, and the wage rises while employment falls.
- Infrastructure Spending Fights a RecessionGovernment spending on infrastructure rises during a recession, and the spending multiplier magnifies the initial increase in G.
- Spending and Taxes Rise TogetherGovernment spending and taxes rise by the same amount, and because the spending multiplier is larger than the tax multiplier, aggregate demand still shifts right.
- Tax Cuts and the Tax MultiplierLower income taxes raise disposable income and consumption, and the tax multiplier moves AD by less than an equal-sized change in government spending.
- A Payroll Tax Increase Cools SpendingA higher payroll tax cuts take-home pay and consumption, so aggregate demand falls, with part of the tax increase absorbed by lower saving.
- Automatic Stabilizers in a DownturnA downturn raises transfer payments, and the extra disposable income lifts household consumption, cushioning the fall in aggregate demand.
- Spending Cuts Deepen a DownturnA large spending cut arrives while the economy is already weak, and the multiplier drives aggregate demand far enough to deepen the gap.
- A Technology BreakthroughA new production process raises productivity in both industries, shifting the whole production possibilities curve outward.
- A Decade of Building CapitalYears of choosing capital goods over consumption add to the economy's resources, shifting the frontier outward.
- An Earthquake Destroys FactoriesA natural disaster wipes out factories and infrastructure, so the economy loses resources and the frontier shifts inward.
- The Labor Force ExpandsPopulation growth and immigration add workers, a resource increase that shifts the frontier outward.
- A Global Glut Pushes the World Price DownA global glut drives the world price lower, so imports widen, domestic producers supply less, and consumers gain more than producers lose.
- A Tariff Lands on ImportsA per-unit tariff lifts the price inside the country to the world price plus the tariff, so imports shrink, the government collects revenue, and two deadweight loss triangles open.
- A Trade Dispute Tariff Is RepealedA tariff left over from a trade dispute is removed, so the price inside the country drops back to the world price, imports widen, and the deadweight loss disappears.
- A Global Shortage Lifts the World PriceThe world price rises toward the domestic no-trade equilibrium, so domestic producers expand along their supply curve and the import gap narrows.
- A Demand Boom in an Import MarketDomestic demand shifts right while the world price holds still, so domestic production is unchanged and every additional unit consumed is imported.
Running one of these with a class
Each link below opens the walkthrough as a prediction first. Students say what they think happens to price and quantity, lock it in, and only then watch the graph move. It takes about five minutes, there are no accounts, and nothing is graded or stored. Paste one into Google Classroom as a bell-ringer, or open it on the projector and have the room commit out loud before you press play.
- Tea Gets PricierAP Micro
- A Rise in National SavingAP Macro
- Coffee Beans Get ExpensiveAP Micro
- An Excise Tax on SellersAP Micro
- A Subsidy to SellersAP Micro
- Drought Hits the Wheat CropAP Micro
- New Sellers Enter the MarketAP Micro
- Buyers Expect Prices to RiseAP Micro
- A Recession Hits a Normal GoodAP Micro
- Corn Pays Better Than SoybeansAP Micro
- A Town's Population GrowsAP Micro
- The Fad FadesAP Micro
- New Safety Rules Raise CostsAP Micro
- World Oil Prices CollapseAP Macro
- Wages Rise Across the EconomyAP Macro
- A Consumer Spending BoomAP Macro
- Spending and Taxes Rise TogetherAP Macro
- Tax Cuts and the Tax MultiplierAP Macro
- Spending Cuts Deepen a DownturnAP Macro
Common questions
- What is a graph walkthrough?
- It is a guided, step-by-step animation of an economic event on one AP Economics graph. You advance one step at a time, the curves shift as the causal chain unfolds, and each step explains what just moved and why. It is the watch-and-learn companion to actively drawing the graph yourself.
- Why does tracing a shock step by step matter for the AP exam?
- AP free-response questions reward showing the full chain of cause and effect, not just the final answer. The walkthroughs model exactly that habit: a shock hits, one curve shifts, that changes an outcome, which can trigger a further adjustment (like long-run self-correction). Practicing the sequence is how you earn every point on a graph FRQ.
- Which graphs and scenarios are covered?
- Seven core graphs: supply and demand, AD-AS, the money market, loanable funds, the Phillips curve, foreign exchange, and the labor market. Scenarios include multi-step processes a single shift cannot show, such as AD-AS self-correction to the long run, crowding out, and the short-run to long-run Phillips curve adjustment.
Ready to do it yourself? Try the draw-the-graph FRQ drills for graded practice, or explore any model freely in the graph sandbox.