AGGREGATE DEMAND Flashcards
What is aggregate demand?
total demand for goods and services in a market
What shape is a aggregate demand curve?Why?
Negative gradient
A rise in price level will lead to a fall in the equilibrium level of national income and therefore of national output
What is on a aggregate demand curve?
X axis=Real GDP
Y axis=Price level
AD going downwards
What does the aggregate demand curve show?
The relationship between the price lvel and the level of total expenditure in the economy.
What are components of aggregate demand
consumer spending
gov spending
investment
exports-imports
What causes the aggregate demand curve to shift to the right
Changes in costs of raw materials and energy, exchange rates, tax rates
What is supply side?
an economy’s ability to produce goods and services????
What is short run aggregate supply?
model that shows the positive realtionship between aggregate PL and amount of aggregate output supplied in an economy
Factors influencing short-run Aggregate supply?
Changes in costs of raw materials and energy, exchange rates, tax rates
