Aggregate Demand and Aggregate Supply

This chapter introduces the Aggregate Demand/Aggregate Supply model of macroeconomics. Read the introduction and Section 1 to learn about Aggregate Demand and the three effects (weath, interest rate, and international trade) that cause the downward slope. Recall the difference between quantity demanded and demand - the same logic applies to Aggregate Demand. Identify the variables that change (shift) the Aggregate Demand curve. Read this chapter and attempt the "Try It" exercises. You will revisit certain sections of the chapter later in this unit.

Aggregate Demand


Explain the effect of each of the following on the aggregate demand curve for the United States:

  1. A decrease in consumer optimism
  2. An increase in real GDP in the countries that buy U.S. exports
  3. An increase in the price level
  4. An increase in government spending on highways