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Aggregate  demand and supply
1.Monetor
                                        output
  y policy
   2.Fiscal     Aggrega
    policy        te
                demand    Interactio   Employme
   3.Other                              nt and
                             n of
    forces                             unemploy
                          aggregate
                           demand        ment
1.Price level                and
                           supply      Prices&infl
  and costs     Aggre                     ation
 2.Potential     gate
   output       supply
3.capital,lab
or,technolog                            Foreign
                                         trade
      y
   Aggregate supply refers to the total quantity of
    goods and services that the nations business
    willing to produce and sell in a given period.
   Aggregate supply depends upon the price level
    ,the productive capacity of the economy and
    level of costs.
   It refers to the total amount that different
    sectors in the economy willing to spend in a
    given period .
   Aggregate demand is the sum of spending by
    consumers ,business, and governments, and it
    depends on the level of prices ,as well as on the
    monetary policy, fiscal policy, and other
    factors,
   The downward sloping curve is the aggregate
    demand schedule, or AD curve.
   It represents what everyone in the economy-
    consumes, business, foreigners and
    governments-would buy at different price
    levels.
   AD curve represents the quantity of total
    spending at different price levels, with other
    factors held constant.
   The upward sloping curve is the aggregate
    supply schedule or AS curve.
   This curve represents the quanity of goods and
    services that buisness are willing to produce
    and sell at each price level.
   Macro economic equilibrium is a combination
    of overall price and quantity at which all
    buyers and sellers are satisfied with their
    purchases, sales and prices.
   Once the equilibrium is reached neither the
    buyers nor sellers wish to change their quanties
    demanded r supplied ,and there is no price
    level change.

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Aggregate demand and supply

  • 2. 1.Monetor output y policy 2.Fiscal Aggrega policy te demand Interactio Employme 3.Other nt and n of forces unemploy aggregate demand ment 1.Price level and supply Prices&infl and costs Aggre ation 2.Potential gate output supply 3.capital,lab or,technolog Foreign trade y
  • 3. Aggregate supply refers to the total quantity of goods and services that the nations business willing to produce and sell in a given period.  Aggregate supply depends upon the price level ,the productive capacity of the economy and level of costs.
  • 4. It refers to the total amount that different sectors in the economy willing to spend in a given period .  Aggregate demand is the sum of spending by consumers ,business, and governments, and it depends on the level of prices ,as well as on the monetary policy, fiscal policy, and other factors,
  • 5. The downward sloping curve is the aggregate demand schedule, or AD curve.  It represents what everyone in the economy- consumes, business, foreigners and governments-would buy at different price levels.  AD curve represents the quantity of total spending at different price levels, with other factors held constant.
  • 6. The upward sloping curve is the aggregate supply schedule or AS curve.  This curve represents the quanity of goods and services that buisness are willing to produce and sell at each price level.
  • 7. Macro economic equilibrium is a combination of overall price and quantity at which all buyers and sellers are satisfied with their purchases, sales and prices.
  • 8. Once the equilibrium is reached neither the buyers nor sellers wish to change their quanties demanded r supplied ,and there is no price level change.