Economics 101Chapter09

Economics 101Chapter09 - 1 Objectives for Chapter 9...

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Objectives for Chapter 9 Aggregate Demand and Aggregate Supply At the end of Chapter 9, you will be able to answer the following: 1. Explain what is meant by aggregate demand ? 2. Name the four categories of aggregate demand? 3. Explain what will cause a movement along the aggregate demand curve? 4. Name as many factors as you can that will cause a shift in aggregate demand? 5. Define "fiscal policy" and "monetary policy" . 6. Explain what is meant by aggregate supply ? Draw the aggregate supply curve. 7. Explain what will cause a movement along the aggregate supply curve? 8. Name as many factors as you can that will cause a shift in aggregate supply? 9. Explain what is meant by "macroeconomic equilibrium" ? 10. Explain what is meant by "Potential Real GDP" and by the "GDP Gap" . 11. Explain what will result if there is an increase in aggregate demand. 12. Define "demand inflation" and "expansion" . 13. Explain what will result if there is a decrease in aggregate demand. 14. Define "recession", "depression", "deflation", and "disinflation" . 15. Explain what will result if there is a decrease in aggregate supply. 16. Explain what could cause such a decrease in aggregate supply? 17. Explain what a "supply shock" is? 18. Define "stagflation" (an "inflationary recession" ) . 19. Explain what will result if there is an increase in aggregate supply. 20. Explain how the "supply-side economists" believe they can achieve an increase in aggregate supply? 1
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Chapter 9 Aggregate Demand and Aggregate Supply (latest revision May 2006) In the past few chapters, we have been analyzing the demand for and the supply of various goods and services. But macroeconomics is not about individual goods and services. Macroeconomics is about aggregates . As you learned in Chapter 1, the term “aggregates” refers to large groupings of goods and services or of people . So, in this chapter, we will begin our analysis of aggregate demand and aggregate supply. Aggregate demand refers to the total demand for all goods and services produced in the United States. Aggregate supply refers to the total supply of all goods and services produced in the United States. These two concepts will be used continually throughout the remainder of the course. When we analyzed the demand for and the supply of an individual good, we graphed the quantity of that good and the price of that good. Now, we are considering all goods and services. So, instead of the quantity of a particular good, we show the quantity of all goods and services produced in the United States. As you learned in Chapter 2, this quantity is measured by the Real Gross Domestic Product (Real GDP) . And, instead of the price of a particular good, we show the prices of all goods and services produced in the United States. As you learned in Chapter 4, these prices are measured by a price index called the Gross Domestic Product Deflator (GDP Deflator) . Go back to Chapters 2 and 4 to review these important concepts. 1.
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Economics 101Chapter09 - 1 Objectives for Chapter 9...

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