PPT-Ch. 10: Aggregate Supply and Demand

Derive ASAD model Understand cause amp consequences of change in ASAD Short run vs Long run Effects on economic growth prices unemployment Different schools of thought in macroeconomics Macroeconomic Long Run and Short Run. 29. McGraw-Hill/Irwin. Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.. Aggregate Demand. Real GDP desired at each price level. Inverse relationship. Real balances effect. 12. McGraw-Hill/Irwin. Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.. Aggregate Demand. Real GDP desired at each price level. Inverse relationship. Real balances effect. Aggregate Demand. Aggregate Demand slopes downward like other demand curves, but for different reasons.. Aggregate Demand. An increase in the aggregate price level will cause real spending to decrease. This is seen as a movement upward along a given AD curve. Today:. Aggregate demand. Why is it downward sloping?. Factors that affect the aggregate demand. Aggregate supply. Long-run aggregate supply. Short-run aggregate supply. Why is it upward sloping?. Factors that affect the short-run aggregate supply. Derive AS/AD model . Understand cause & consequences of change in AS/AD. Short run vs Long run. Effects on economic growth, prices, unemployment.. Different schools of thought in macroeconomics. Macroeconomic Long Run and Short Run. Aggregate Supply. Learning Objectives. Define the aggregate demand curve. Explain why it slopes downward. Explain why it shifts. Define the aggregate supply curve. Explain why it slopes downward. Explain why it shifts. Chapter 11. McGraw-Hill/Irwin. Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.. Chapter 11: Learning Objectives. You should be able to:. Explain what aggregate planning is and how it is useful. Day 1. Q1: During the Great Depression we saw a rise in unemployment and deflation. In the recession of 1979-1982 a rise in unemployment but inflation. Why?. Q2: What is stagflation?. Aggregate Supply and Aggregate Demand. The quantity of a specific product that a buyer is . able. . and . willing. to buy at a certain price. Usually at a particular . time. and . place. Remember those . time and place utilities . that add value to a product??. Introduction & Determinants. Aggregate Demand Curve . (Inverse) Relationship between price level & quantity of aggregate output demanded for the economy as a whole. Aggregate Price Level (measured with GDP deflator). . Adam . smith, credited by many as the founder of classical economics believed the government should intervene in economic affairs as little as possible. John Maynard Keynes asked, “If supply creates its own demand, why are we having a worldwide depression?”. Principle of Effective Demand is the pillar of Keynesian Theory of Employment. Dillard considers the principle of effective demand to be the logical starting point of Keynesian Theory of Employment.. Demand and Supply are . most fundamental concepts of economics and it is the backbone of a market . economy.  . Demand . refers to how much (quantity) of a product or service is desired by buyers. . Principles of Macro Economics 1. ECONA 201. Introduction to Macroeconomics. Macroeconomics. deals with the economy as a whole; it examines the behavior of economic aggregates such as aggregate income, consumption, investment, and the overall level of prices..