The aggregate demand curve can be thought of just like a demand curve for a firm

The aggregate demand curve can be thought of just like a demand curve for a firm

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The aggregate demand curve can be thought of just like a demand curve for a firm.  When the price level is high, aggregate demand is low; when the price level is low,  aggregate demand is high. The aggregate demand curve lies in a plane consisting of  the price level and income or output. It shows a downward slope with price level on the  vertical axis and income or output on the horizontal axis. As such, the aggregate  demand curve outlines the relationship between income or output and the price level. It  is important to notice that aggregate demand is a schedule because as the price level  changes, the income or output also changes.  There are four major components of aggregate demand. The equation for aggregate  demand, Y = C(Y - T) + I(r) + G + NX(e), tells much about the nature of both aggregate  demand and the curve that represents this schedule. 
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This note was uploaded on 12/13/2011 for the course ECO 1310 taught by Professor Staff during the Fall '10 term at Texas State.

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