Presented To:

Mr. Rasheed
Presented By:

Friends Group
MBA 2 (Evening)
nd
 Group Members

Zawar Hussain 10597

M.Haroon 10618
Aggregate Demand
and
Aggregate Supply
 M. Haroon
Roll No 10618
 Aggregate Demand:
Total amount that different sectors in economy willingly spend in
a given period shown as AD

I
Expected Revenue

C+
Y=
=
AD

Real National Income

 Aggregate Supply:

Total quantity of goods and services that the nations businesses are
willing to produce in a given period. Shown as ADcc

+S
Expected Revenue

= C
=Y
AS

Real National Income

 Macroeconomics Equilibrium:

Combination of overall price and quantity at which neither buyers nor sellers wish
to change their purchase, sale or price.

AS=AD AS
Expected Revenue

AD

B2
E
B1

Y1 Ye Y2
Real National Income
 Policy Variables\Instruments
 Exogenous Variables:

a) War
b) Revolutions
c) Foreign Economics Condition
d) Population Growth

 Induced Variable:

a) National Output
b) Employment & Unemployment
c) Price Level
Zawar Hussain
Roll No 10597
 Money
Spending
Supply
Relationship of AS & AD
Output
GDP
Tax

Other AD
Employment
&
Unemployment
Interrelation Of
AD&AS
Price
Price &
Level
AS
Inflation

Potential
output
Foreign
Trade
C&L Inputs
 A typical short-run aggregate supply curve

AS
Price level

AD4

AD3
AD1 AD2
O Y1 Y2 Y3 Y4 YP
National output
 The Short-run AS & AD curve
when firms are interdependent

SRAS1
(expected price level = P1)
Price level

P1
a

SRAD1
O Q1
National output
 Long Run Potential Output return AS
P

AD
Price Level

AS

AD

Real Output Q
 Long Run Potential Output return
P

Potential Output AS
AS1
Price Level

E1
P1
P E

AD

Q1 Q
Real Output Q
Thanks