1. Aggregate Demand and Supply

2. Aggregate Demand Aggregate means “total”
Total demand for ALL FINAL goods and services in the economy
from all people in the economy
for all prices levels

3. Components Aggregate demand consists of: consumer spending (C)
investment spending (I)
government spending (G)
net export spending (NX).
If any component increases, GDP increases, AD curve shifts right.
If any component decreases, GDP decreases, AD curve shifts left

4. THE CURVE
High price level leads to lower quantity of aggregate demand P
P stands for price levels in the economy
AD is aggregate demand – total demand for all final goods and services in the economy
Q is real GDP (output) of all final goods and services AD Q

5. Total production of ALL FINAL goods and services in the economy
Aggregate Supply
Total production of ALL FINAL goods and services in the economy
from all poducers in the economy
for all prices levels