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

Changes in aggregate demand

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

You remember in Microeconomics you studied what shifts the position of the Demand Curve (PoPzYTEP): the Non-Price Demand Determinants in a Market?

In the economy as whole the components (determinants) of Aggregate Demand are C+I+G+X-M and any change in any of these variables shifts the position of the AD curve. See animation below for further explanation:

N.B. A change in the Price Level is represented by a movement along the AD curve.

Syllabus: Describe consumption, investment, government spending and net exports as
the components of aggregate demand.

See bottom of interaction for full (if repetitive) statements on determinants (components) of AD.

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

• Changes in aggregate demand

N.B. A change in the price level will simply be represented by a movement along the AD curve. (Repetition is the Mother of all learning)

Syllabus: Explain how the AD curve can be shifted by changes in consumption (C) due to factors including:

• changes in consumer confidence,
  
• interest rates,
  
• wealth,
  
• personal income taxes (and hence disposable income) and
  
• level of household indebtedness.
  

Syllabus: Explain how the AD curve can be shifted by changes in investment due to factors including:

• interest rates,
  
• business confidence,
• technology,
  
• business taxes and
  
• the level of corporate indebtedness.
  

Syllabus: Explain how the AD curve can be shifted by changes in government spending due to
factors including

• political and
  
• economic priorities.

Syllabus: Explain how the AD curve can be shifted by changes in net exports due to factors including:

• the income of trading partners,
• exchange rates and
• changes in the level of protectionism.

Refer to Section 3 International Economics for detail of these last factors.