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Canada (161,733)
Economics (924)
ECN 204 (282)
Amy Peng (21)
Chapter 10

ECN 204 Chapter 10 Notes.docx

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ECN 204
Amy Peng

ECN 204 Chapter 10 Notes Aggregate DemandIs a schedule or curve that shows the amounts of real output real GDO that buyers collectively desire to purchase at each possible price levelAggregate Demand Curve o RealBalances EffectA change in the price level produces a realbalances effectIs the inverse relationship between the price level and the real value or purchasing power of financial assets with fixed money valueSo a higher price level means less consumption spending o InterestRate EffectThe direct relationship between price level and the demand for money which affects interest rates and as a result total spending in the economySimilarly consumers may decide not to purchase a new house or automobile when the interest rate on loans goes up So by increasing the demand for money and consequently the interest rate a higher price level reduces the amount of real output demanded o Foreign
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