ch11 Aggregate Demand

ch11 Aggregate Demand - Aggregate Supply & Aggregate...

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Aggregate Supply & Aggregate Demand Chapter 11-2 Aggregate Demand
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The AS/AD Model The AS/AD model is fundamentally different from the microeconomic supply/demand model.
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The AS/AD Model Microeconomic supply/demand curves concern the price and quantity of a single good. Price of a single good is measured on the vertical axis and quantity of a single good is measured on the horizontal axis. The shapes are based on the concepts of substitution and opportunity cost.
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The AS/AD Model In the AS/AD model the price of everything is on the vertical axis and aggregate output is on the horizontal axis. So there is no substitution
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Aggregate Demand The aggregate demand curve shows the relationship between the aggregate price level and the quantity of aggregate output demanded by households, businesses, and the government
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The aggregate demand ( AD ) curve shows how a change in the price level changes aggregate expenditures on all goods and services in an economy. It shows the level of expenditures that
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ch11 Aggregate Demand - Aggregate Supply & Aggregate...

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