Tag: aggregate-demand

3 pages tagged aggregate-demand.

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Chapter 48: Aggregate Demand and Aggregate Supply — Economics 101

Aggregate demand (AD) and aggregate supply (AS) are the macroeconomic counterparts to the individual market’s supply-and-demand model. Together they explain why economies expand and contract, why unemployment and inflation move the way they do, and why the short run and long run behave so differently.
Chapter 49: Macroeconomic Equilibrium — Economics 101

Macroeconomic equilibrium is where aggregate demand meets aggregate supply. Short-run equilibria can sit above or below the economy’s long-run potential — creating inflationary or recessionary gaps. Classical economists trust markets to close those gaps automatically; Keynesians don’t.
Chapter 53: Monetary Policy — Economics 101

Monetary policy is the Fed’s toolkit for steering the economy: open market operations, the discount rate, and reserve requirements each adjust the money supply and interest rates, shifting aggregate demand and — through it — GDP, unemployment, and inflation.