Aggregate Demand and Aggregate Supply - Aggregate Demand
6 important questions on Aggregate Demand and Aggregate Supply - Aggregate Demand
What is a negative demand shock referring to?
for the whole economy.
What is the curve that shows the relation ship between aggregate price level and the quantity of aggregate output demanded? And who are they demanded by?
the aggregate output demanded by the firms, the government and the rest of the world.
Why is the aggregate demand curve is downward sloping? and what are the three reason why aggregate demand curve is downward sloping?
- The curve is downward sloping indicating a negative relationship between the aggregate price level and and the quantity of aggregate output demanded
- due to
- to the wealth effect, of a change in the aggregate price level,
- to the Interest rate effect of a change in the aggregate price level.
- to the interest rate effect of a change in the aggregate price level
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What is the difference between the demand curve's downward slope and the aggregate demand curve's downward slope?
- For the demand curve the demand for a good is downward sloping because of an increase in price of a good makes it more expensive to by thus decreasing demand
- However, the AD is sloped downwards because of a simultaneous change in price of ALL final goods and services, and changes in the composition of goods and services in consumer spending aren't relevant to the aggregate demand curve
What is the effect on consumer spending that arises from the effect of a change in the aggregate price level on the purchasing power of consumer's assets?
From where does the AD curve derive from?
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Aggregate Demand - Government policies and Aggregate Demand - Fiscal policy
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Aggregate Demand - Government policies and Aggregate Demand - Monetary Policy
