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3 Tutorials that teach Aggregate Supply and Aggregate Demand
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Aggregate Supply and Aggregate Demand

Aggregate Supply and Aggregate Demand

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Author: Dan Laub
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This lesson covers aggregate supply and aggregate demand.

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Terms to Know
Aggregate Demand (AD)

Total amount of goods and services demanded in an economy at a specific point in time and at a prevailing price level.

Exchange Rate Effect

Exchange rate movements impact demand; domestic currency depreciation increases the cost of imports, resulting in a potential decrease in imports, M; the lower domestic exchange rate increases foreign demand for domestic goods, increasing exports, X.

Interest Rate Effect

As interest rates fall, consumption increases due to the decrease in the cost of borrowing; as a result, purchases and business investment (consumption, C, and investment, I, respectively) both increase.

Long Run Aggregate Supply (LRAS)

Total amount of goods and services supplied in an economy in the long run.

Short Run Aggregate Supply (SRAS)

Total amount of goods and services supplied in an economy in the short run.

Wealth Effect

Perception that wealth has increased, resulting in an increase in consumption, C.