Macroeconomics

Table of Contents

1. Topic pack - Macroeconomics - introduction
2. 2.1 The level of overall economic activity (notes)
3. 2.1 The level of overall economic activity (questions)
4. Section 2.2 Aggregate demand and supply (notes)
   1. Aggregate demand and supply - introduction
   2. The AD/AS model
   3. Aggregate demand curve
   4. Changes in aggregate demand
   5. Short-run aggregate supply (SRAS)
   6. Changes in SRAS
   7. Long run aggregate supply (LRAS) - classical
   8. Changes in LRAS - classical
   9. Long run aggregate supply (LRAS) - Keynesian
   10. Aggregate supply changes
   11. Full employment level of national income
   12. Equilibrium national income
   13. The essentials of AD and AS
   14. Changes in short-run equilibrium - summary
   15. Equilibrium in the long run?
   16. Equilibrium in the Keynesian model
   17. Inflationary and deflationary gaps
   18. Keynes vs. Hayek (video)
   19. The Keynesian multiplier
5. Section 2.2 Aggregate demand and supply (simulations and activities)
6. 2.2 Aggregate Demand and Aggregate Supply (questions)
7. 2.3 Macroeconomic objectives (notes)
8. Low Unemployment
9. 2.3 Macroeconomic objectives (questions)
10. 2.4 Fiscal policy (notes)
11. 2.4 Fiscal policy (questions)
12. 2.5 Monetary policy (notes)
13. 2.5 Monetary Policy (questions)
14. Section 2.6 Supply-side policies (notes)
15. 2.6 Supply-side policies (questions)
16. Print View

Aggregate demand

Syllabus: Distinguish between the microeconomic concept of demand for a product and the
macroeconomic concept of aggregate demand.

You know the microeconomic definition of demand (Can you repeat it now?)

The definition of Aggregate Demand though is very precise and not the same at all:

Definition of AD:

The total amount of planned expenditure in an economy over a period of time.

Textbooks, teachers and economists often miss the key word planned (even on the presentation below it is missing from the definition but I cannot edit it) so memorise the above definition and use it every time.

Syllabus: Construct an aggregate demand curve.

You could be given national income (GDP) data and possible Price Levels and asked to plot an AD (Paper 3) but I doubt it (too hypothetical). You could even be given C,I,G,X and M figures so you need to sum these to find AD and then plot but I really doubt it!) Anyway I assume you can plot a linear graph once the data is established.

Syllabus: Explain why the AD curve has a negative slope.

However this has been asked on a Paper 3 and many candidates (I marked it for the IB) did not know the reasons and gave a microeconomic answer based on the Law of Demand - they scored zero. So learn the following interaction:

Aggregate demand curve

If you would prefer to view this interaction in a new web window, then please follow the link below:

• The aggregate demand curve