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Aggregate Demand (AD)

Total quantity of goods and services demanded in an economy at different price levels and periods.

Components of Aggregate Demand

Consumption, Investment, Government Spending, and Net Exports.

Consumption (C)

Households' spending on goods and services.

Investment (I)

Businesses' spending on capital goods for future production.

Government Spending (G)

Government expenditure on goods and services.

Net Exports (NX)

The difference between exports and imports (exports minus imports).

Aggregate Supply (AS)

Total supply of goods and services that firms plan to sell in a specific time period.

Short-Run Aggregate Supply (SRAS)

AS curve that is upward sloping in the short run due to higher prices leading to increased output.

Long-Run Aggregate Supply (LRAS)

Represents the economy's maximum sustainable output where all resources are fully employed and prices are flexible.

Factors affecting AD

Changes in consumer confidence, fiscal policies, and monetary policies.

Factors affecting AS

Changes in resource prices, improvements in technology, and government regulations.

Equilibrium

The point where AD and AS curves intersect, determining overall price levels and output.

Macroeconomic Goals Related to AD and AS

Economic growth, price stability (inflation control), and low unemployment.