Aggregated Demand and Supply Study Guide

What does LRAD stand for?

• Long run aggregated demand

• Lets run around Denver

• Long run account demand

• Long run aggregated distribution

What two stand for AD and AS?

• Amended Demand, Amended Supply

• Agricultural Demand, Agricultural Supply

• Aggregated Demand, Aggregated Supply

• Apples Die, Apples Spoil

1. What factors influence Aggregate Demand?

• Employment Status, Savings Rates, and Taxes changes

• Potatoes, Yams, and Burger

• Individual Preferences, Changes in individual income, and Individual Wealth

• Spending, Business Investment, Government Expenditure, and Net Exports

1. How does the intersection of Aggregate Demand and Aggregate Supply determine equilibrium output and price level?

• Equilibrium output and price level are determined solely by changes in government spending.

• Occurs where Aggregate Demand intersects Aggregate Supply, determining the economy's level of real output and the price level

• Equilibrium output and price level are determined by the actions of individual firms rather than aggregate market forces.

• Equilibrium output and price level are fixed and do not respond to changes in demand or supply.

How do factors of Aggregated Demand affect the overall level of economic activity?

• Solely determined by the level of government spending and does not respond to changes in consumer behavior or investment.

• 1. Only changes in international trade affect economic activity; domestic factors like consumer spending and investment are irrelevant.

• Consumer spending, investment, government spending, and net exports.

• Factors of Aggregate Demand have no impact on economic activity; it is solely determined by government policies.

How do factors of Aggregated Demand affect the overall level of economic activity?

• olely determined by the level of government spending and does not respond to changes in consumer behavior or investment.

• 1. Only changes in international trade affect economic activity; domestic factors like consumer spending and investment are irrelevant.

• Consumer spending, investment, government spending, and net exports.

• Factors of Aggregate Demand have no impact on economic activity; it is solely determined by government policies.

What is Aggregated Demand?

• Aggregate Demand is a measure of the overall satisfaction of consumers in the economy

• The amounts of real domestic output which domestic consumers, businesses, governments, and foreign buyers collectively will desire to purchase at each possible price level
  

• Aggregate Demand refers to the total amount of money held by individuals in the economy

• Aggregate Demand is the sum of individual demands for a single product or service

What does the blue line stand for in the graph.

• Aggregated Demand

• Aggregated Supply

What does the red line stand for?

• Aggregated Supply

• Aggregated Demand

Why is Aggregated Demand Downwards Sloping?

• Because higher prices reduce real spending
  power, prices and output are negatively related.

• Real Balance Effect, Foreign Purchases Affect, and Interest Rate Effect

• higher prices lead to inflation which leads to less
  borrowing and a lowering of RGDP

• Full employment makes it so that increases in
  aggregate demand only increase wages or prices.