The horizontal axis shows a quantity: of a good or service, of labor for a given job, or of financial capital. The vertical axis shows the matching measure of price: the price of a good or service, the wage in the labor market, or the rate of return (such as the interest rate) in the financial market. The same demand and supply curves, and the same equilibrium E at P and Q, explain how economic events change prices, wages and rates of return.
There are only four possibilities: an event shifts the demand curve right or left, or the supply curve right or left. The key to analyzing an event is to decide which of the four happened, by thinking back to the lists of factors that shift each curve. If more than one factor changes at once, economists isolate each change and analyze it on its own. Use the sliders to try each of the four shifts.