Aggregate demand and Aggregate Supply

Introduction to Aggregate Demand And Aggregate Supply

In Economics, Aggregate Demand And Aggregate Supply are the macroeconomic view of the country's total demand and supply curves. Aggregate Demand Aggregate demand (AD) is the total demand for final goods and services in a given economy at a given time and price level. Aggregate Demand Formula Aggregate Demand is the total of Consumption, Investment,...

Four Components of Aggregate Demand

There are four components of Aggregate Demand (AD); Consumption (C), Investment (I), Government Spending (G) and Net Exports (X-M). Aggregate Demand shows the relationship between Real GNP and the Price Level. Four Components of Aggregate Demand Any increase in any of the four components of aggregate demand leads to an increase or shift in the aggregate demand...
The Trade Cycle

The Trade Cycle

The different phases an economy goes through over time, such as booms and recessions, is known as the business or the trade cycle or the business cycle. The line through the trade cycle is called the trend line, which shows that the economy is generally always moving upwards or growing in the long run. Phases of the...
Accelerator Effect

The Accelerator Effect

In Economics, the Accelerator Effect, a Keynesian concept, is used to explain the level of investment in an economy. The accelerator effect refers to a positive effect on private fixed investment of the growth of the market economy. Investment is a function of changes in National Income, especially consumption. Investment is a key component of...


Bimetallism is a monetary standard in which the value of the monetary unit is defined as equivalent both to a certain quantity of gold and to a certain quantity of silver; such a system establishes a fixed rate of exchange between the two metals. Characteristics of Bimetallism Both gold and silver money are legal tender in unlimited amounts. Highly popular use of currency...
Monetary Policy

Monetary Policy

In Economics, Monetary Policy involves the country's central bank controlling the interest rate and money supply. Monetary policy affects Aggregate Demand (AD), and an expansionary monetary policy increases AD, while a contractionary monetary policy decreases AD. The goals of monetary policy are to promote employment, stabilize prices and control long-term interest rates, thereby supporting conditions for long-term...

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