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AggregateDemandandAggregateSupply
2AggregateDemandAggregatedemandisthequantityofrealgoodsandservicesthatwillbedemandedatvariouspricelevelsoveraspecifictimeperiodaggregatedemand=consumption+investment+government+netexports
3AggregateDemandConsumptiondemandoriginateswiththehouseholdsectordirectlyrelatedtoincomeandinverselyrelatedtointerestratesInvestmentemanatesfromthebusinessandhouseholdsectorsdirectlyrelatedtoincomeandinverselyrelatedtotheinterestrate
4AggregateDemandGovernmentdemandincludesonlypurchasesofgoodsandservicestransferpaymentsarenotincludeddeterminedbycomplexpoliticaldecision-makingprocessthatincludesbothCongressandthePresident
5AggregateDemandNetexportsarethedifferencebetweenexportsandimportsinverselyrelatedtotheexchangerateandtocapitalinflows
6TheAggregateDemandCurveThereisaninverserelationshipbetweentheaggregatequantityofrealgoodsandservicesdemandedandtheoverallpricelevel
7TheAggregateDemandCurveRealGDP(inBillions)PriceIndexAggregateDemandOverallPriceLevel(InBillions)0.95$1,7001.001,5001.051,300$1,300$1,500$1,7001.051.00.95AD
8TheAggregateDemandCurveAlongaparticularaggregatedemandcurve,allfactorsbesidesthepricelevelandthequantityofrealgoodsandservicesdemandedareheldconstantincluding:thenominalmoneysupplyexpectationsaboutfutureeconomicconditionsinterestratestaxesgovernmentpurchases
9TheAggregateDemandCurveTherearethreereasonswhyeconomistsbelievethataggregatedemandisdownwardslopingwealth(realbalances)effectsubstitution-of-foreigngoodseffectconstant-nominal-incomeeffect
10TheWealth(RealBalances)EffectWhentheoverallpricelevelchangesforagivenmoneysupply,thesupplyofrealmoneybalanceschangesspendingunitswillexperienceachangeinwealthThisleadstoaninverserelationshipbetweenthepricele
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