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January 16, 2018 

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RETAINED EARNINGS: Officially termed undistributed corporate profits, these are corporate profits that are neither paid as corporate profits taxes nor paid to shareholders as dividends. Undistributed corporate profits are important for the derivation of personal income from national income. Because undistributed corporate profits are income that is earned by the shareholders, but not received, it falls in the general category of income earned but not received (IEBNR), and is subtracted from national income in the derivation of personal income.

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Lesson Contents
Unit 1: The Concept
  • What It Is
  • Circular Flow
  • Unit 1 Summary
  • Unit 2: Doing More
  • Expenditures
  • Consumption Expenditures
  • Investment Expenditures
  • Government Purchases
  • Net Exports
  • Unit 2 Summary
  • Unit 3: The Curve
  • Highlights
  • Slope
  • Real-Balance Effect
  • Interest-Rate Effect
  • Net-Export Effect
  • Unit 3 Summary
  • Unit 4: Determinants
  • Instability
  • Shifts: Increase
  • Shifts: Decrease
  • Unit 4 Summary
  • Unit 5: Policies Plus
  • Business Cycles
  • Policies
  • Unit 5 Summary
  • Course Home
    Aggregate Demand

    This lesson introduces aggregate demand, the demand-side of the aggregate market. The aggregate market is the key model used to explain and analyze the workings of the macroeconomy and aggregate demand is a critical half of this model (the other is aggregate supply). Taking a clue from market demand, this lesson examines the nature of aggregate demand, including the relation between the price level and aggregate expenditures, the reason the aggregate demand curve is negatively sloped, and the assorted aggregate demand determinants that cause the aggregate demand curve to shift.

    • The first unit of this lesson introduces the concept of aggregate demand and how it fits into the study of macroeconomics in terms of the aggregate market and circular flow.
    • In the second unit, we example the four aggregate expenditures -- consumption, investment, government purchases, and net exports -- the make up aggregate demand.
    • The third unit then examines the aggregate demand curve that captures the aggregate demand relation between the price level and aggregate expenditures, especially the importance of the real-balance, interest-rate, and net-export effects.
    • A look at the assorted aggregate demand determinants that shift the aggregate demand curves is the topic of the fourth lesson.
    • We end this lesson in the fifth unit with a look how demand-management policies work to stabilize business cycles through aggregate demand.

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    CHANGE IN DEMAND

    A shift of the demand curve caused by a change in one of the demand determinants. A change in demand is caused by any factor affecting demand EXCEPT price. A related, but distinct, concept is a change in quantity demanded.

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    APLS

    BLUE PLACIDOLA
    [What's This?]

    Today, you are likely to spend a great deal of time touring the new suburban shopping complex looking to buy either a set of serrated steak knives, with durable plastic handles or a pair of blue silicon oven mitts. Be on the lookout for the happiest person in the room.
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    This isn't me! What am I?

    The 1909 Lincoln penny was the first U.S. coin with the likeness of a U.S. President.
    "Good humor is a tonic for mind and body. It is the best antidote for anxiety and depression. It is a business asset. It attracts and keeps friends. It lightens human burdens. It is the direct route to serenity and contentment."

    -- Grenville Kleiser, Author

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    Consumer Price Index
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