The+Aggregate+Demand+and+Aggregate+Supply+model

As economists we want to be able to model what is happening in an economy- particularly th__e__ macroeconomy. This enables us to analyse what causes changes in the economy at macro level and to therefore develop appropriate policies to achieve our macro goals;

**Macroeconomic objectives/goals**
Governments are usually aiming to:
 * Maintain high levels of **employment** or perhaps even **full employment**.
 * Maintain **price stability**- low and consistent levels of **inflation**
 * Keep medium to long term **balance between imports and exports**
 * Maintain high levels of **economic growth**
 * Reduce i**ncome inequality**

One of the most common theoretical frameworks for analysing the marcroeconomy is **aggregate demand and supply.** Aggregate means **total**- we are now looking at the total demand and supply in a whole economy instead of an individual market.

What is the difference between the AD/AS model and the demand and supply model?

MICRO Looks at a particular market- e.g. sunglasses versus MACRO Looks at the economy as a whole MICRO Equates price and quantity versus MACRO Equates the price level with the level of real output MICRO Indicates microeconomic equilibrium where D=S versus MACRO Indicates macroeconomic equilibrium where AD=AS

__ Aggregate Demand __

 * [[file:1. An introduction to the components of Aggregate Demand.docx]]
 * [[file:2. What determines the level of household consumption.docx]]
 * [[file:3. Factors influencing the level of Investment Expenditure.docx]]
 * [[file:AD data response exercises.pdf]]
 * [[file:5. The AD curve.doc]]
 * [[file:6. Exercise on AD curve.docx]]
 * [[file:7. Shifts in the AD curve.doc]]


 * Does China need to diversify its sources of economic growth?
 * Growth of consumption in China

__ HL: The Multiplier __

 * [[file:8. The multiplier.doc.docx]]
 * [[file:9. Multiplier questions.pdf]]

__ Aggregate Supply and Macroeconomic equilibrium __

 * [[file:10. Aggregate supply - new notes.doc]]
 * [[file:11. Macroeconomic equilibrium.doc]]
 * [[file:12a.. Introduction Exercise for Long -run equilibrium.docx]]
 * [[file:12b. Economics- U$A- Keynesian theory.docx]]
 * [[file:12b. Neo Classical versus Keynesian LRAS curves and equilibrium.doc]]

__ Test your understanding: AD/AS Exercises __

 * [[file:AD-AS exercise-.xls]]
 * [[file:2. AD-AS model MC practice- with Keynes.doc]]
 * [[file:Aggregate Demand and Supply exercise.doc]][[file:Aggregate Demand and Supply exercise- answers.doc]]
 * [[file:AD-AS Questions.doc]]