Macro Ch - 2

Aggregate demand

Aggregate demand

Refers to the total value of demand for all goods and services in an economy by all stakeholders at different price levels over a time period.

AD = C + I + G + (X-M)

What relationship does AD curve show

shows the relationship between the general price level and real GDP of an economy.

General Price level

The general price level is the average price of all goods and services in an economy.

Real GDP

Real GDP shows the total value of output of final goods and services in an economy.

Real GDP vs AD

Real GDP is a specific point on the AD curve at a specific price level