Topic 7: Aggregate Demand

Key Points

  1. Understand the concept of an aggregate demand shock
  2. Know the determinants of consumption spending
  3. Know the determinants of investment spending
  4. Know the determinants of spending on net exports
  5. Know which spending determinants will shift the aggregate demand curve
  6. Be able to describe the economics that makes the short-run aggregate demand curve downward sloping (negatively related to price)
  7. Be able to know and work with the spending multiplier and how it relates to aggregate demand shifts

Overview Video

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