Module 8: The Aggregate Demand-Aggregate Supply Model
Assignment: problem set — the aggregate demand-aggregate supply model.
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ECON102: Principles of Macroeconomics (2021.A.01)
Unit 3: aggregate demand and aggregate supply.
In this unit we explore the forces affecting growth, inflation, and unemployment at the aggregate level, such as output, income, or the set of components within GDP.
Aggregate demand is the total amount of goods and services people want to purchase. It measures what people want to buy, rather than what is actually produced. The aggregate demand is the sum of consumption, investment, government expenses, and net exports. Aggregate supply is the total output an economy produces at a given price level. We consider aggregate supply in the short-run and in the long-run.
Completing this unit should take you approximately 9 hours.
Upon successful completion of this unit, you will be able to:
- graphically represent and interpret an aggregate demand curve, and explain why it slopes downward;
- analyze the factors leading to a shift of the aggregate demand curve;
- graphically represent and interpret a short-run aggregate supply curve, and explain why it slopes upward;
- analyze the factors leading to a shift of the short-run aggregate supply curve; and
- graphically represent and interpret a long-run aggregate supply curve, and distinguish between short-run and long-run equilibrium.
3.1: Aggregate Demand
This chapter introduces the Aggregate Demand/Aggregate Supply model of macroeconomics. Read the introduction and Section 1 to learn about Aggregate Demand and the three effects (weath, interest rate, and international trade) that cause the downward slope. Recall the difference between quantity demanded and demand - the same logic applies to Aggregate Demand. Identify the variables that change (shift) the Aggregate Demand curve. Read this chapter and attempt the "Try It" exercises. You will revisit certain sections of the chapter later in this unit.
The following three videos will help you get a good understanding of the Aggregate Demand curve and the factors that shift it. Later we will put Aggregate Demand and Aggregate Supply together on the same graph and will analyze the resulting equilibrium and its implications on the economy's health.
3.2: Consumption, Investment, and the Aggregate Expenditures Model
Read this chapter to examine consumption and its determinants within the aggregate expenditures model. Consumption is the largest component of Aggregate Demand the United States, therefore, the factors that determine consumption, also determine the success of the economy.
Read this chapter to examine factors that determine private investment and its link to output within the macroeconomy. Private investment plays an important role in the short run by influencing aggregate demand, and in the long run by influencing the rate of growth of the economy.
The following videos explore the aggregate expenditure model in detail. You will analyze planned expenditures relative to actual output using the Keynesian Cross and will see how a change in government spending can lead to a new equilibrium. The model also introduces the spending multiplier and shows how it links aggregate demand factors with the ultimate level of GDP in the economy.
3.3: Aggregate Supply In the Short-Run and the Long-Run
Review section 2 of Aggregate Demand and Aggregate Supply chapter assigned in 3.1, about short run aggregate supply and the way it differs from long-run aggregate supply.
The following videos will walk you through the definitions of Short-Run Aggregate Supply and Long-Run Aggregate Supply. Pay attention to what distinguishes the short-run from the long-run. What causes price and wage stickiness in the short-run and what are the implications for the shape of the supply curves. For example, the short-run aggregate supply curve slopes upward due to the lag between product prices and resource prices that makes it profitable for firms to increase output when the price level rises. The long-run aggregate supply curve is vertical when a country is at full employment. The long-run aggregate supply curve is vertical because, in the long run, resource prices adjust to changes at the price level, which leaves no incentive for firms to change their output. In the long run, prices and wages have no effect on the aggregate supply curve.
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This assignment is the quiz given to students at the end of the lesson to demonstrate mastery....the grade received was a 100%. score: 25 of 25 points question ... The aggregate demand model dictates that given a price level increase in an economy, the aggregate demand will shift left the aggregate demand will shift right the aggregate quantity ...
3- Aggregate Demand Aggregate- <added all together= When we use aggregates we combine all prices and all quantities Aggregate demand: All goods and services (real GDP) that buyers are willing and able to purchase at different price levels.. If the price level: Increases (inflation), then real GDP demanded falls. Decreases (deflation), the real GDP demanded increases
3- Aggregate Demand Aggregate- <added all together= When we use aggregates we combine all prices and all quantities Aggregate demand: All goods and services (real GDP) that buyers are willing and able to purchase at different price levels.. If the price level: Increases (inflation), then real GDP demanded falls. Decreases (deflation), the real GDP demanded increases
AP @ Macroeconomics Unit 3 National Income and Price Determination 3.1 Aggregate Demand Assignment 1. Explain how each of the following effects leads to a decrease in real GDP when the price level rises.
Study with Quizlet and memorize flashcards containing terms like Define AD and give examples of the determents of aggregate demand., Define AS and give examples of the determents of aggregate supply., Define sticky vs. flexible wages and sticky vs. prices and more. ... economics unit 3. 17 terms. madisonstar03. Preview. Aggregate-expenditures ...
Changes in Aggregate Demand (Draw the appropriate shift in AD. Include and label both axes, AD1 and AD2, and use an arrow to show movement. If AD does not move, draw AD1 only) 2. A terrible year in the stock market and the housing market has greatly decreased the value of people's stocks and homes. 3.
1. When GDP is down, unemployment is higher and more benefits will be paid out, This helps increase AD. 2. When GDP is up, unemployment is low and fewer benefits will be paid out, automatically decreasing AD. Unit 3 review covering topics 3.1 -3.9 including: Aggregate Demand, Aggregate Supply, AD-AS Equilibrium, Changed in AD-AS, Long-Run Self ...
Aggregate Supply. the quantity of final goods and services producers are willing and able to supply at any given price level. Long Run Aggregate Supply. a period of time that is long enough for all fixed cost contracts to expire. All prices become flexible and able to achieve equilibrium.
Class notes. 100% (8) 4. Unit 2 notes - tonnes of vocab and concepts from unit 2 organized nicely. AP Macroeconomics. Class notes. 100% (8) 18. Youth Restiveness and Socio Economic Dev.
AP Macroeconomics (Unit 3): 3.1 Aggregate Demand. aggregate demand. Click the card to flip 👆. all the goods and services (real GDP) that buyers are willing and able to purchase at different price levels; the demand for everything by everyone in the USA; there is an inverse relationship between the price level and real GDP; C + I + G + (X-M ...
Introduction: The graph below shows the aggregate demand in the United States at three different levels. Assume the economy starts at AD1. Once you are completed with all 10 questions, submit to the Unit 3: Aggregate Demand dropbox. Assuming the economy begins at AD1, identify which AD curve will result from each of the changes described below. 1.
Unit 3: Aggregate Demand Assignment Introduction: The graph below shows the aggregate demand in the United States at three different levels. Assume the economy starts at AD1. Once you are completed with all 17 questions, submit to the Unit 3: Aggregate Demand dropbox. AD3 is a rightward shift and AD2 is a leftward shift.
Unit 3: Aggregate Demand Assignment Introduction: The graph below shows the aggregate demand in the United States at three different levels. Assume the economy starts at AD1 for every single question. Once you are completed with all 17 questions, submit to the Unit 3: Aggregate Demand dropbox. AD3 is a rightward shift and AD2 is a leftward shift. AD1 would be no shift, just movement along the ...
Introduction: The graph below shows the aggregate demand in the United States at three different levels. Assume the economy starts at AD1. Once you are completed with all 10 questions, submit to the Unit 3: Aggregate Demand dropbox Assuming the economy begins at AD1, identify which AD curve will result from each of the changes described below. 1. An increase in labor productivity causes ...
Step 1: To view this assignment, click on Assignment: Problem Set — The Aggregate Demand-Aggregate Supply Model. Step 2: Follow the instructions in the assignment and submit your completed assignment into the LMS.
4. Using Figure 23.2, determine whether each situation below will cause an increase, decrease or no change in AD. Always start at curve B. If the situation would cause an increase in AD, draw an up arrow in column 1. If it causes a decrease, draw a down arrow. If there is no change, write NC. For each situation that causes a change in aggregate ...
BUS 1104 Written Assignment UNIT 3 Preview text When one talks of Aggregate demand, one is referring to the relationship between the total quantity of goods and services demanded (from all the four sources of demand) and the price level, all other determinants of spending unchanged.
total. aggregate demand. the sum of all the demand in the economy. real wealth effect. change in price level causes change in purchasing power of consumers to change. interest rate effect. Change in the price level indirectly leads to a change in the interest rate, which changes the quantity of AD. exchange rate effect.
Econ Unit 3.1: Aggregate Demand, Aggregate Supply and Fiscal Policy. Flashcards. Learn. Test. Match. Flashcards. Learn. Test. Match. Created by. andrea_stapper. Terms in this set (23) Aggregate. ... Verified answer. algebra. With an original goal of selling fresh apples from the family orchard at a roadside stand, Deer Valley Organics has ...
Unit 3: Aggregate Demand and Aggregate Supply, and Consumption and Aggregate Expenditures Model. ... Written Assignment. Answer the following questions about marginal propensity to consume and the multiplier. First provide the correct equation and then show your work to arrive at the answer:
Unit 3: Aggregate Demand and Aggregate Supply. In this unit we explore the forces affecting growth, inflation, and unemployment at the aggregate level, such as output, income, or the set of components within GDP. Aggregate demand is the total amount of goods and services people want to purchase. It measures what people want to buy, rather than ...
Step 1. Identify the components of aggregate demand: Consumption (C), Investment (I), Government Spending (G... View the full answer Step 2. Unlock. Step 3. Unlock. Answer. Unlock. Previous question Next question.
The aggregate demand/aggregate supply model is a model that shows what determines total supply or total demand for the economy and how total demand and total supply interact at the macroeconomic level. Aggregate supply is the total quantity of output firms will produce and sell—in other words, the real GDP.