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AGGREGATE MARKET SHOCKS: Disruptions of the equilibrium in the aggregate market (or AS-AD model) caused by shifts of the aggregate demand, short-run aggregate supply, or long-run aggregate supply curves. Shocks of the aggregate market are associated with, and thus used to analyze, assorted macroeconomic phenomena such as business cycles, unemployment, inflation, stabilization policies, and economic growth. The specific analysis of aggregate market shocks identifies changes in the price level (GDP price deflator) and real production (real GDP). However, changes in the price level and real production have direct implications for the unemployment rate, the inflation rate, national income, and a host of other macroeconomic measures.
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Lesson 9: Macro Basics | Unit 5: Issues
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Page: 16 of 16
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- How differing views on the 'best' economic policies result from basic differences in ideologies, values, and beliefs, and from vested interests of those benefitting from policies.
- Why we have alternative, competing macroeconomic theories because of differing political views and the inability to undertake definitive tests of each theory.
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AGGREGATE DEMAND SHIFTS Changes in the aggregate demand determinants cause the aggregate demand curve to shift. The mechanism is comparable to that for market demand determinants and market demand. There are two alternatives--an increase in aggregate demand and a decrease in aggregate demand. An increase in spending by any of the four sectors--household, business, government, and foreign--shifts the aggregate demand curve to right. A decrease in spending by these four sectors shifts the aggregate demand curve to left.
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GRAY SKITTERY
[What's This?]
Today, you are likely to spend a great deal of time touring the new suburban shopping complex hoping to buy either a Boston Red Sox baseball cap or a square lamp shade with frills along the bottom. Be on the lookout for neighborhood pets, especially belligerent parrots.
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This isn't me! What am I?
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In the late 1800s and early 1900s, almost 2 million children were employed as factory workers.
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"As the births of living creatures at first are ill-shapen, so are all innovations, which are the births of time. " -- Sir Francis Bacon, philosopher
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EBIT
Earnings Before Interest and Taxes
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