Introduction to Aggregate Demand 

 

Practicing Aggregate Demand

1. Price Level _______________
2. RGDP        _______________

Aggregate Supply and Demand

Create your own Shifters!

Key Vocabulary

Disposable Income

Marginal Propensity to Consume (MPC)

Marginal Propensity to Save (MPS)

Spending Multiplier= 1/(1-MPC)     

1= MPC + MPS                               

Change in Consumption= MPC * Change in Disposable Income            

Aggregate Demand

Short Run Aggregate Supply

Long Run Aggregate Supply

Long- Run Equilibrium

Recessionary Gaps-  Need Expansionary Policy

Inflationary Gaps- Need Contractionary Policy    

Fiscal Policy

The Credit Market- https://www.intelligenteconomist.com/crowding-out-effect/   How government spending impacts the AD curve

Crowding Out Theory- https://www.investopedia.com/terms/c/crowdingouteffect.asp  Quick video showing a potential impact of government borrowing

 

Helpful Websites- Always recognize the potential political perspective of the individual or organization that produced the websites.  As macroeconomists do your best to stay above the political fray. 

 

https://www.youtube.com/watch?v=vj7XExwChwI- The Truth about savings and consumption by fee.org

 

https://www.youtube.com/watch?v=qrHyDztQlBY- 60 second adventure into the paradox of thrift

 

http://www.youtube.com/watch?v=oW6E25NODHE&safety_mode=true&persist_safety_mode=1&safe=active- Flipped lesson on the impact of fiscal policy on aggregate demand

 

https://courses.lumenlearning.com/boundless-economics/chapter/aggregate-supply/ - an in depth look into the difference between SRAS and LRAS

 

http://www.amosweb.com/cgi-bin/awb_nav.pl?s=wpd&c=dsp&k=contractionary+fiscal+policy- Step by step approach to fiscal policy

 

https://www.coursera.org/lecture/strategic-business-management-macroeconomics/closing-recessionary-and-inflationary-gaps-cd85V - Is it better to cut taxes or increase government spending to get out of a recessionary gap?  See how this University of California professor shows the math.