5 Steps to a 5 AP Macroeconomics 2019

106 ❯

IN THIS CHAPTER

Summary: Chapter 7 addressed three widely used measures of macroeconomic

performance: real GDP, inflation, and unemployment. Economists have built

upon the models of supply and demand for microeconomic markets to model

an aggregate picture of the macroeconomy. The models of Aggregate Demand

(AD) and Aggregate Supply (AS) have been extremely useful to predict how

real GDP, employment, and the aggregate price level are affected by external

factors and government policy. Before discussing macroeconomic policy, we

first need to describe the AD/AS model.

Key Ideas

✪ Aggregate Demand (AD)

✪ Aggregate Supply (AS)

✪ Short-Run and Long-Run AS

✪ Macroeconomic Equilibrium

✪ The Inflation and Unemployment Trade-Off

9.1 Aggregate Demand (AD)

Main Topics: What Is Aggregate Demand?, Components of AD, The Shape of AD, Changes in AD

When we discussed microeconomic markets, we described the shape of any micro­

economic demand curve with the Law of Demand, income, and substitution effects. Both

effects work to change quantity demanded in the opposite direction of any price change.

Aggregate Demand and

Aggregate Supply

KEY IDEA

KEY IDEA

9

CHAPTER

“This is the bulk

of the Macro

exam—very

important!”

—AP Teacher