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AGGREGATE DEMAND & SUPPLY ,[object Object],[object Object],[object Object]
AGGREGATE  DEMAND ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Factors affecting AD: ,[object Object],[object Object],[object Object],[object Object],Aggregate demand is a downward sloping curve because as price increases , real balances i.e. nominal balances / prices falls which implies that Aggregate Demand falls.
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Shifts of Aggregate demand curve:
[object Object],[object Object],[object Object],[object Object]
[object Object],[object Object],[object Object],[object Object],Factors affecting  Aggregate Supply
 
AS-AD Framework ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Putting AD and AS together Prices output AS Y f AD Y 1 In this situation, the economy would be operating at less than capacity, there would be unemployment and the economy might be growing only slowly. AD 1 Y 2 A shift in the AD curve to AD1 as a result of a change in any or all of the factors affecting AD would increase growth, reduce unemployment but at a cost of higher inflation (a trade-off)
[object Object],[object Object],[object Object],[object Object]
Consumption Function: ,[object Object],[object Object],[object Object],[object Object],[object Object]
mpc and mps ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Mpc and mps ,[object Object],[object Object],[object Object],[object Object],[object Object]
45 degree model cons income C=a+bY 45Degree line Intersection with 45degree line  gives y=c
45 degree model
multiplier ,[object Object]
MULTIPLIER ,[object Object],[object Object],[object Object],[object Object]
multiplier ,[object Object]
Shift of Investment Function:
Multiplier: ,[object Object],[object Object],[object Object],[object Object],[object Object]
MULTIPLIER  ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Multiplier: ,[object Object],[object Object],[object Object]
multiplier ,[object Object]
[object Object]
[object Object]
Limitations of the Multiplier: ,[object Object],[object Object],[object Object],[object Object],[object Object]
Accelerator Model: ,[object Object],[object Object],[object Object]
Assumptions: ,[object Object],[object Object],[object Object]
[object Object],[object Object],output Required stock of capital Net investment 30 60 - 40 80 20 60 120 40 70 140 20 80 160 20 95 190 30 95 190 0 90 180 -10
limitations ,[object Object],[object Object],[object Object],[object Object]
[object Object],[object Object],[object Object]

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Aggregate+demand+&supply

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  • 8.
  • 9. Putting AD and AS together Prices output AS Y f AD Y 1 In this situation, the economy would be operating at less than capacity, there would be unemployment and the economy might be growing only slowly. AD 1 Y 2 A shift in the AD curve to AD1 as a result of a change in any or all of the factors affecting AD would increase growth, reduce unemployment but at a cost of higher inflation (a trade-off)
  • 10.
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  • 14. 45 degree model cons income C=a+bY 45Degree line Intersection with 45degree line gives y=c
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  • 19. Shift of Investment Function:
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