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AD CURVE: The aggregate demand curve, which is a graphical representation of the relation between aggregate expenditures on real production and the price level, holding all ceteris paribus aggregate demand determinants constant. The aggregate demand, or AD, curve is one side of the graphical presentation of the aggregate market. The other side is occupied by the aggregate supply curve (which is actually two curves, the long-run aggregate supply curve and the short-run aggregate supply curve). The negative slope of the aggregate demand curve captures the inverse relation between aggregate expenditures on real production and the price level. This negative slope is attributable to the interest-rate effect, real-balance effect, and net-export effect.
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Lesson 17: Money | Unit 4: Money's History
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Page: 17 of 25
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A long time ago, our ancestors realized that life could be better with a little trading.- Our ancestors first satisfied their own wants and needs.
- Then, self-sufficiency gave way to barter.
Two reasons for barter: - First: Barter lets resources specialize in production.
- Second: With barter trades, people can access a wider variety of goods than they could produce on their own.
- Barter is a more effective way of satisfying our wants and needs.
However barter is not perfect: - We need double coincidence of wants.
- It takes resources for trades.
Therefore: - Our ancestors progressed to the next stage: commodity money.
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AGGREGATE DEMAND DECREASE, SHORT-RUN AGGREGATE MARKET A shock to the short-run aggregate market caused by a decrease in aggregate demand, resulting in and illustrated by a leftward shift of the aggregate demand curve. A decrease in aggregate demand in the short-run aggregate market results in a decrease in the price level and a decrease in real production. The level of real production resulting from the shock can be greater or less than full-employment real production.
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RED AGGRESSERINE
[What's This?]
Today, you are likely to spend a great deal of time wandering around the shopping mall seeking to buy either a package of 4 by 6 index cards, the ones with lines or a 50 foot extension cord. Be on the lookout for empty parking spaces that appear to be near the entrance to a store.
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This isn't me! What am I?
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Al Capone's business card said he was a used furniture dealer.
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"There is at least one point in the history of any company when you have to change dramatically to rise to the next level of performance. Miss that moment, and you start to decline. " -- Andy Grove, Intel Corp. chairman
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QJE
Quarterly Journal of Economics
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