Aggregate demand/supply
Published on Dec 23, 2015
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MORE DECKS TO EXPLORE
PRESENTATION OUTLINE
just like we had shifts for our demand curve
in micro economics - same idea for macro economics
Photo by JonathanCohen
change in aggregate demand
- change in consumption
- change in investment
- changes in government spending
- changes in export demand (foreign trade)
changes in consumption
income spending
- consumption
- government (tax)
- saved for the future
- spent on imports
consumption (in gdp FORMULA)
accounts for 60% of the gdp... so we care where this goes
this happens when...
increase in lvl of income or decrease in savings, tax, import spending
Photo by Andrew_Writer
changes in investment
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if we expect the business to do well with lots of profit...
investment increases - ad shifts right
if we predict business to be not so hot
invest less... shift to the left
closely related to the interest rate
higher the interest, less people are willing to invest (investments require borrowing money)
Photo by zingbot
changes in government spending
Photo by Jon Chevier™
less spending shift to the left
due to changes in government policy, conservative vs liberal?
changes in export demand (trade)
3 factors influencing demand for canadian exp
- domestic inflation (increase-less export)
- income of other countries (increase-more export)
- value of Canadian dollar (increase-less export)
changes in aggregate supply
Photo by paul goyette
change in price of inputs
if price of land, labour, or capital increases-make less stuff
Photo by Olof S
something new can be discovered
more capital available, workforce grows
