ECO 15 - 2 FEB - Lecture 15 ECO 100Y5Y 02 February 2009 A....

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Lecture 15 02 February 2009 ECO 100Y5Y A. Cohen 1 E C O N O M I C S PARKIN BADE Lecture 15 2 February 2009 Aggregate Demand Aggregate demand ( AD ) — relationship between quantity real GDP ( Y ) demanded and price level ( P ), ceteris paribus ♦ ↑ P aggregate quantity demanded ( Y ) Y = C + I + G + X M movement along AD curve continued 90 120 100 110 130 900 950 1000 1050 1150 0 AD E ' D' C' B' A' Decrease in quantity real GDP demanded Increase in quantity real GDP demanded Figure 22.6 Aggregate Demand Price level Real GDP
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Lecture 15 02 February 2009 ECO 100Y5Y A. Cohen 2 Downward-sloping AD curve ( P Y ) because of wealth effect — P purchasing power of assets spending and saving substitution effects — P substitution towards cheaper foreign goods ( (X – M)) savings ( S due to interest rates ) continued Ceteris paribus assumptions for AD curve fiscal and monetary policy unchanged fiscal policy — taxes,
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This note was uploaded on 04/25/2010 for the course ECONOMICS ECO100Y taught by Professor Furlong during the Fall '09 term at University of Toronto- Toronto.

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ECO 15 - 2 FEB - Lecture 15 ECO 100Y5Y 02 February 2009 A....

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