IntroductiontoEconomicFluctuation幻灯片.pptVIP

…and, in an open economy, net exports. (See chapter 12.) The textbook explains different ways of thinking about the AD curve’s slope. Here’s one that I find works for students: An increase in the price level causes a fall in real money balances, and therefore a fall in the demand for goods services (because the demand for output is proportional to real money balances according to the simple money demand function that is implied by the quantity theory of money). For future reference (a bunch of slides later in this chapter), it will be useful to see how a change in M shifts the AD curve.