3 concepts
Introducing Aggregate Demand
Aggregate demand (AD) is defined as the total demand for final goods and services in a given economy at a specific time.
The Slope of the Aggregate Demand Curve
Due to Pigou's Wealth Effect, the Keynes' Interest Rate Effect, and the Mundell-Fleming Exchange Rate Effect, the AD curve slopes downward.
Reasons for and Consequences of Shifts in the Aggregate Demand Curve
An increase in any of the four inputs into AD will result in higher real output or an increase in prices.