Introduction

This lesson will focus on the economic activity in the overall economy. You will be exposed to the total demand and total supply in the country. The terms aggregate demand and aggregate supply will look similar to the supply and demand concepts from an earlier module. The difference is instead of focusing on an individual item, aggregate means adding everything together.

It is at the intersection of aggregate demand and aggregate supply that we can see the price level and output in an economy. Once you understand the basics of the AS and AD curves you will learn the determinants that shift the curves and cause changes in price level and unemployment.

 

 

 

 

Lesson Objectives

Following successful completion of this lesson, students will be able to:

  • describe how AD and AS will change with given situations.
  • use the AS/AD model to explain an economy that is in a recession, inflation or equilibrium.

The above objectives correspond with the Alabama Course of Study: Economics objectives: 9.1.

 

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