Econ 4.3

Wednesday, March 31, 1999

Announcements: Homeworks 8 is due on Friday. There will be review session in 262 Willard on Tuesday, 4/6, from 6:30 to 8 pm. The exam is Wednesday, 4/7.

Lecture notes:  

Assett Value

• Annual Income / Interest Rate = Asset Value

Chapter 14: Aggregate Demand, Aggregate Supply and Inflation

• Aggregate Demand represents the total demand for all goods and services in the economy
• The Aggregate Demand Curve shows the negative relationship between aggregate output (income) and the price level . Each point on the AD curve is a point at which both the goods market and the money market are in equilibrium.
• The AD Curve is NOT a market demand curve
• AD = C + I + G
• As price level changes, AD curve shifts
  • Price Rises --> AD shifts down