Aggregate Demand and Aggregate Supply Analysis

These flashcards cover key terms and concepts related to aggregate demand and supply analysis in economics.

Aggregate Demand (AD)

The total demand for an economy's goods and services at a given price level in a given time period.

Consumer Expenditure

Spending by households on goods and services to satisfy current wants.

Investment

Spending by private sector firms on capital goods, such as factories and machinery.

Government Spending

Total expenditure by local and national governments on goods and services.

Net Exports (X-M)

The difference between the value of exports and the value of imports.

Short-Run Aggregate Supply (SRAS)

The total output of an economy that will be supplied when there has not been enough time for the prices of factors of production to change.

Long-Run Aggregate Supply (LRAS)

The total output that is supplied when the prices of factors of production have fully adjusted to changes in aggregate demand.

Equilibrium in AD/AS Model

The output and price level achieved where aggregate demand equals aggregate supply.

Dissaving

When consumer expenditure exceeds income, causing people or countries to draw on past savings or borrow.

Shifts in Aggregate Demand Curve

These occur when a non-price level influence causes aggregate demand to change, leading to a shift to the left (decrease) or right (increase).