Aggregate Demand Curve

Aggregate Demand Curve

A graph representing demand for goods and services in an economy at different prices. If prices are increasing while demand remains constant, this indicates the economy's aggregate supply is inadequate to meet demand. One calculates the aggregate demand curve by combining and properly weighting the demand curves for individual goods and services.
References in periodicals archive ?
With no entry fee, equilibrium price (P*) and quantity (Q*) are defined where marginal cost (MC) equals the aggregate demand curve.
It can be seen in Figure 1 that when aggregate demand curve moves to the right, the price increases resulting inflation.
A note on macroeconomic textbooks: the use of the aggregate demand curve.
In general, when aggregate demand is more elastic, the increase in real GDP is larger and the decrease in the price level is smaller such that a balance of trade deficit would be greater or a balance of trade surplus would be smaller than for a less elastic aggregate demand curve.
The sixth edition adds a section on the recent crisis in the Eurozone and explains more carefully the distinction between nominal and real interest rates and the constant money supply assumption behind the aggregate demand curve.
Samuelson and Solow ([1960] 1966, 1,348) assumed that the empirical Phillips curve they identified was "a reversible supply curve for labor along which an aggregate demand curve slides.
They also show that the aggregate demand curve for the convenience provided by Treasury debt is downward sloping, and they provide estimates of the elasticity of demand.
The policymaker observes the supply shock and then chooses the price level (making the aggregate demand curve a horizontal line at the chosen price level).
It says that fiscal policy works by changing relative prices and shifting the aggregate supply curve, not by raising or lowering disposable income and shifting the aggregate demand curve.
If policymakers are unwilling to increase the price of water to equilibrate the market, the only remaining alternatives are non-price policy instruments that shift the aggregate demand curve from D to D[prime] at the prevailing price of [P.
In Chart 3, the aggregate supply curve and the aggregate demand curve in the absence of economic shocks are displayed as AS and [AD.

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