ECON 1010 Study Guide - Aggregate Demand, Aggregate Supply, Gdp Deflator
Document Summary
Chapter twenty six aggregate supply and demand. This chapter explains the aggregate supply aggregate demand model or as-ad model. The model provides a framework for understanding the forces that make our economy expand, that bring inflation, and that cause business cycle fluctuations. The as-ad model also provides a framework within which we can see the range of views of macroeconomists in different schools of thought. The purpose of the asad model is to explain how real gdp and the price level are determined and how they interact. Asad model is a model of imaginary market for the total of all the final goods and services that make up real gdp. The quantity in this market is real gdp and the price is the price level measured by gdp deflator. One thing asad shares with the competitive market model is that both distinguish between supply and the quantity supplied.