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Macroeconomics
Quick questions on Aggregate demand and aggregate supply - TCE Economics (Tasmania)
3short Q&A pairs drawn directly from our worked dot-point answer. For full context and worked exam questions, read the parent dot-point page.
What is aggregate demand?Show answer
Aggregate demand (AD) is the total planned spending on Australian-produced goods and services at each price level. It has four components.
What is aggregate supply?Show answer
Aggregate supply (AS) is the total output firms plan to produce at each price level. Its shape captures how close the economy is to capacity.
What is macroeconomic equilibrium?Show answer
Equilibrium is where AD meets AS, setting the equilibrium real output and price level. If planned spending exceeds output, firms run down stocks and expand, lifting output and prices. If output exceeds spending, stocks build up and firms cut back. The economy settles where the two are equal.
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