Probably one of the most serious problems with AS/AD analysis is the assumption of the independence of the two curves. In reality we would rarely see one of them shifting without the other one doing so also, especially if the one shifting is AS. But this independence has also often been overstated at the micro level as well, although I rarely see anybody losing sleep over it. But one of the underpinnings of the identification problem that lies at our inability to figure out whether or not bread in 19th century Britain was really a Giffen good or not is precisely due to the problem that the producers of the bread were also major consumers of the bread. I would also note at the micro level, that in many industries changes in supply take a lot of time, so the whole ceteris paribus assumption for constructing such curves is just ludicrous in reality. At the macro level, I have no problem with engaging in the following kind of exercise. Let both M and V be fixed, hence a fixed nominal GDP with a hyperbolic AD curve a la Fred Foldvary's (although for teaching I prefer more behavioral ones). Pick any old AS you want, vertical, upward-sloping, with zones, whatever. Let it suddenly shift backwards due to a negative supply shock, an oil price shock (was this not the case that brought AS/AD analysis into the textbooks?). Let the AD curve remain fixed, no changes in M or V. One then moves backwards up along it to observe the classic stagflationary outcome, no need to worry about disequilibrium effects or any of the rest of this, much less where this is coming from with regard to the (or an) ISLMic analysis. Artificial? Yes, but not all that much more so than what is done at the micro level, especially given that the foundations for standard utility maximization that supposedly lie behind our micro demand curves are completely in the trash can, with only the textbook writers not dealing with this as the theorists have yet to pick up the garbage and figure out how we do those things in the light of what is now known about how people behave (again, see George Akerlof's lecture and related work in behavioral econ). Barkley Rosser