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Aggregate Demand and Aggregate Supply 12A Appendix McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

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Presentation on theme: "Aggregate Demand and Aggregate Supply 12A Appendix McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved."— Presentation transcript:

1 Aggregate Demand and Aggregate Supply 12A Appendix McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

2 Derivation of Aggregate Demand Price Level Aggregate Expenditures (billions of dollars) 45° AE 2 (at P 2 ) AE 3 (at P 3 ) AE 1 (at P 1 ) Q3Q3 Q2Q2 Q1Q1 Real Domestic Product, GDP AD P3P3 P2P2 P1P LO1 LO5 12A-2

3 Aggregate Demand Shifts Price Level Aggregate Expenditures Real Domestic Product, GDP 45° AE 2 (at P 1 ) AE 1 (at P 1 ) Q1Q1 Q2Q2 AD 1 P1P1 AD 2 LO5 12A-3


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