MKT 300 Midterm: MKT midterm
Document Summary
The model of aggregate demand and aggregate supply: the model of aggregate demand and aggregate supply: the model that economists use to explain short run fluctuations in economic activity around its long run trend, aggregate demand curve: a curve that shows the quantity of goods and services, aggregate supply curve: a curve that shows that quantity of goods and services that households, firms and the government want to buy at each price level. that firms choose to produce and sell at each price level. An event that makes firms invest less at any given price (pessimist about the future, a ride in interest rate due to a decrease in the money supply) shifts the aggregate demand to the left: shifts arise from changes in net exports: an even that raises spending on net exports at a given price level (a boom experienced by a major trading partner, an exchange rate depreciation) shifts curve to the right.