The variables that we study are largely those we have already seen in previous chapters. They include GDP unemployment, interest rates, and the price level. Also familiar are the policy instruments of government spending, taxes, and the money supply. What differs from our earlier analysis is the time horizon. So far, our focus has been on the behavior of the economy in the long run. Our focus now is on the economy's short-run fluctuations around its long-run trend. Although there remains some debate among economists about how to analyze short-run fluctuations, most economists use the model of aggregate demand and aggregate supply. Learning how to use this model for analyzing the short-run effects of the various events and policies is the primary task ahead. This chapter introduces model's two key pieces---- the aggregate demand curve and the aggregate-supply curve. But before turning to the model, let's look at the facts.