Filippo Rebessi's Zoom Meeting

Introduction to Demand and Supply

• Overview of the Module

  • Three important topics covered:

    • Brief introduction to demand and supply

    • Explanation of aggregate demand and its characteristics

    • Overview of aggregate supply, differentiating between short-run and long-run aggregate supply

Understanding Economic Graphs

• Importance of Economic Graphs

  • Essential for visualizing relationships between variables in economics

  • Includes components like price and quantity to analyze demand and supply curves

Demand Curve

• Characteristics of the Demand Curve

  • Downward Sloping: Demand curve slopes downward from left to right

    • As price decreases, the quantity demanded increases

    • Inverse relationship between price and quantity demanded

• Example Used: Apples

  • Utilizes simple examples like apples to explain how demand works

Supply Curve

• Characteristics of the Supply Curve

  • Generally upward sloping: As price increases, quantity supplied increases

    • Direct relationship between price and quantity supplied

Aggregate Demand (AD)

• Definition and Importance

  • Aggregate Demand is the total demand for final goods and services in an economy at a given time and price level

• Downward Sloping Nature of Aggregate Demand

  • Reasons for downward slope include:

    • Wealth effect: Consumers feel wealthier when prices drop, leading to increased spending

    • Interest rate effect: Lower prices lead to lower interest rates, encouraging more borrowing and spending

    • International effect: When domestic prices fall, exports become cheaper for foreign buyers, increasing demand

The Multiplier Effect

• Introduction to the Multiplier

  • Concept explaining how an initial change in spending leads to a larger overall increase in national income

• Mechanics of the Multiplier

  • How initial spending creates additional consumption, leading to repeated cycles of income generation

Aggregate Supply (AS)

• Understanding Aggregate Supply

  • The total supply of goods and services produced within an economy at a given overall price level in a specified time period

• Short-Run vs Long-Run Aggregate Supply

  • Short-Run Aggregate Supply (SRAS): Can be influenced by factors like wages and input prices; typically upward sloping

  • Long-Run Aggregate Supply (LRAS): Represents full capacity of the economy and is vertical; not influenced by price levels