Chapter 7

Chapter 7 - Chapter 7: Aggregate Demand and Aggregate...

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Chapter 7: Aggregate Demand and Aggregate Supply Aggregate Demand = the quantity demanded of all goods and services (Real GDP) at different  price levels, ceteris paribus. Aggregate Demand curve = graphical representation of aggregate demand - Slopes downward Real balance effect = the inverse relationship between the price level and the quantity  demanded of Real GDP is established through changes in the value of monetary wealth (money  holdings) - Purchasing power = the quantity of goods and services that can be purchased with a  unit of money Interest Rate Effect = the inverse relationship between the price-level and the quantity  demanded of Real GDP is established through changes in household and business spending  that is sensitive to changes in interest rates International Trade Effect = the inverse relationship between the price level and quantity  demanded of Real GDP is established through foreign sector spending A change in the quantity demanded of Real GDP moves down/up the line of the graph
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Chapter 7 - Chapter 7: Aggregate Demand and Aggregate...

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