1. Charis, will you go to prom with me?

2. Module Aggregate Demand: Introduction and Determinants KRUGMAN'S MACROECONOMICS for AP* 17 Margaret Ray and David Anderson

3. What you will learn in this Module : How the aggregate demand curve illustrates the relationship between the aggregate price level and the quantity of aggregate output demanded in the economy How the wealth effect and interest rate effect explain the aggregate demand curve’s downward slope What factors can shift the aggregate demand curve

4. Aggregate Demand Curve Horizontal axis Vertical axis Relationship between price level and real GDP demanded Aggregate Demand

5. Why is the Aggregate Demand Curve Downward Sloping? The effect of price level on C, I, and X - M Not the Law of Demand Wealth Effect Interest Rate Effect p p’p’ Y’Y

6. Aggregate Demand p p YY’Y p’

7. Shifts of the Aggregate Demand Curve ∆C, ∆I, ∆G, ∆X - ∆M ∆Expectations ∆Wealth ∆Existing Stock of Capital ∆Fiscal Policy ∆Monetary Policy