Drawingadas drawingadas looklikeds butaxesdiffersubtly

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Unformatted text preview: Produce more as prices rise – Switch to more expensive products What of demand & supply for everything? Drawing AD/AS Drawing AD/AS Look like D & S But axes differ subtly – P = GDP deflator – y = Real GDP P AD AS y What Is Aggregate Demand? What A relationship between price and quantity – Of all goods and services – Demand by all sectors of economy Households, Firms, Government, International C, I, G, (X­M) How does aggregate quantity change with price? How do C, I, G, and NX change with price? Why Does AD Slope Down? Why Does AD Slope Down? Households: wealth...
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