Economics chapter 13: the level of overall economic activity

Aggregate demand

the overall expenditure of goods and services of an economy over a given period of time at given price levels

Aggregate supply

total amount of goods and services produced in an economy at a given price level during a given period of time

causes of change in aggregate demand

• Monetary policy changes: interest rates, money supply

• Fiscal policy changes: government spending, taxation

• Consumer confidence and expectations

• External shocks: exchange rates, global economic conditions

• Wealth effects: changes in asset prices, housing market

causes of change in aggregate supply

• Technological advancements: increase AS

• Changes in input prices: affect production costs

• Government regulations: impact business operations

• Exchange rates: influence export competitiveness

• Natural disasters: disrupt production capabilities