Week 3_5 Aggregate Demand
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Get to know Basic Concepts: -- Aggregate Demand: The relationship between quantity of real GDP demanded and price level. -- Circular flow of income: Y = C + I + G + ( X – M ). -- In line with the law of demand (microeconomics), the higher the price level, the smaller the quantity of real GDP demanded. -- Wealth effect: If there is an increase in price level, real wealth decreases. Real wealth is what you can purchase with, for example, your savings.
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Question: What is a substitution effect? Discuss with fellow students in Discussion Forum. |
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Watch the Video: Download the course slides Download course slides. |