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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


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