The AS/AD model (every paper, Question One)

Demand-pull = AD shifts right. Cost-push = AS shifts left. Every real paper asks you to draw it, then explain the price-level change from the shift.

Reading a scenario onto the graph

Something raises spending (a big event, a payment, more jobs, a tax cut) → AD shifts RIGHT → price level rises.
Something raises businesses' costs (wages, imported inputs, a natural disaster damaging supply) → AS shifts LEFT → price level rises.
Something lowers businesses' costs (falling petrol prices, a productivity gain) → AS shifts RIGHT → price level falls.
Something lowers spending (job losses, higher interest rates) → AD shifts LEFT → price level falls.

Exam-style Petrol prices fall across New Zealand Show the impact on the AS/AD model and explain the effect on the price level. Falling petrol prices lower the cost of production for any business relying on transport or delivery. Lower costs let businesses supply more at every price level, so AS shifts RIGHT to AS₁. The new equilibrium sits at a LOWER price level (PL₁) and a higher real GDP (Y₁). ✓ AS right, price level down — a fall in costs is disinflationary (or deflationary), read straight off the shifted curve. ✕

Compare-the-two-shocks questions need a REASON for which is bigger, not just a bigger label

The Excellence part of Question One is always "which of these two events had the bigger impact on inflation?" — a bare "the petrol price fall was bigger" restates the graph. The reason has to be about SCALE or DURATION: how many businesses/consumers are affected, how permanent the change is, or how directly it feeds into costs across the whole economy.

Practice for this standard covers the whole topic — flashcards and quiz.