Aggregate demand (AD) is the total demand for final goods and services in the economy at a given time and price level. Aggregate expenditure is the current value of all the finished goods and services in the economy. The equation for aggregate expenditure is: AE = C + I + G + NX.

A change in autonomous aggregate expenditures shifts the aggregate expenditures curve for each price level. That shifts the aggregate demand curve by an amount equal to the change in autonomous aggregate expenditures times the multiplier.

How can the aggregate demand curve be derived from the aggregate expenditures model? As the price level falls, the aggregate expenditures curve shifts upward and the equilibrium real GDP increases, but as the price level rises, the aggregate expenditures curve shifts downward and the equilibrium real GDP decreases.

Aggregate expenditure is the relationship between spending and income, while aggregate demand is a relationship between output and the price level.

• change in input prices (domestic resource prices, prices of imported resoures)
• change in productivity.
• change in legal-institutional environment (business taxes and subsidies, government regulations)

An increase in the overall costs of production will cause a decrease in short-run aggregate supply, causing a shift to the left.

A shift in aggregate supply can be attributed to many variables, including changes in the size and quality of labor, technological innovations, an increase in wages, an increase in production costs, changes in producer taxes, and subsidies and changes in inflation.

The decrease in aggregate supply, caused by the increase in input prices, is represented by a shift to the left of the SAS curve because the SAS curve is drawn under the assumption that input prices remain constant. A second factor that causes the aggregate supply curve to shift is economic growth.

Short-run Aggregate Supply Any increase in demand and production increases the prices. In the short-run, the general price level, contractual wage rates, and expectations many not fully adjust to the state of the economy.

In the long-run, the aggregate supply is affected only by capital, labor, and technology. Examples of events that would increase aggregate supply include an increase in population, increased physical capital stock, and technological progress.

Aggregate Supply= consumption + savings.

Aggregate supply and aggregate demand are the total supply and total demand in an economy at a particular period of time and a particular price threshold. Aggregate supply is an economy’s gross domestic product (GDP), the total amount a nation produces and sells.

The aggregate supply curve Aggregate supply, or AS, refers to the total quantity of output—in other words, real GDP—firms will produce and sell. The aggregate supply curve shows the total quantity of output—real GDP—that firms will produce and sell at each price level.

An increase in the expected inflation rate shifts the SRAS curve up and to the left. As shown in Figure 32.13, an increase in the expected inflation rate shifts the SRAS curve up and to the left. Which would cause the LRAS to shift left? This would decrease production.

If all workers and firms adjust to the fact that the price level is higher than they had expected it to be, the short-run aggregate supply curve will shift to the left. If oil prices rise unexpectedly, the short-run aggregate supply curve will shift to the left.

Which of the following shifts the long-run aggregate supply curve to the left? an increase in the price of imported natural resources and an increase in trade restrictions.

there is an increase in the wage rate. This will increase the cost of production for firms and therefore reduce supply of goods and services at any price. This will shift the SRAS to the left.

Which of the following factors could cause the economy to experience​ supply-side inflation? Government laws which say that the average work week must be reduced by one hour every year. An increase in​ long-run aggregate supply cuases the price level to​ increase, and is therefore inflationary.