Concepts
- Aggregate Demand (Total Spending)
- Wealth Effect (Real Balance Effect)
- Interest Rate Effect
- Foreign Purchases Effect
- Moving Along Aggregate Demand
- Change in Price Level
- Components of Aggregate Demand (C+I+G+X)
- Shifting Aggregate Demand
- Consumption (Spending by people)
- Consumer Confidence (Expectations)
- Taxes
- Wealth
- Debt
- Population
- Investment (Business Spending)
- Real Interest Rates
- Taxes
- Expectations
- Government Spending
- Net Export Spending (Spending by Other Countries)
- National Income Abroad
- Exchange Rates
- Consumption (Spending by people)
- Autonomous Spending
- Multiplier’s Impact on AD
Overview
In this lesson, we introduce one of the most important models in macroeconomics: The Aggregate Model. With this model, we address the market forces of supply and demand from a much larger perspective. To better understand this model, we learn each market force individually and in this lesson we focus on Aggregate Demand. Aggregate Demand represents the total spending of an economy and is comprised of 4 parts. People, businesses, the government and other countries all spend money in our economy and thus, influence Aggregate Demand. A primary focus of this lesson is understanding what causes each component to change, and how these changes cause the Aggregate Demand curve to shift. We’ll also review the basic idea of autonomous spending, and then finish up by looking at the impact multipliers have on the Aggregate Demand curve.
Materials
Lecture
Video Coming at Later Date
Quiz
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