Aggregate Demand and Supply and LRAS; Macroeconomics

Mr. Clifford introduces AP Econ students to the crucial macroeconomic concepts of aggregate demand and supply. He explains how aggregate demand is downward sloping due to price levels affecting the quantity demanded. Aggregate demand is composed of GDP components: C, I, G, and XM. The short-run aggregate supply is upward sloping, with firms producing more as prices rise, but wages and resource prices remain constant. In the long run, wages adjust, making the long-run aggregate supply vertical. The video also covers inflationary and recessionary gaps, showing how shifts in aggregate demand affect price levels and output, leading to new equilibriums.

What is aggregate demand and how does it relate to the price level?

Explain the difference between short-run aggregate supply and long-run aggregate supply.

What happens to aggregate supply when there is an increase in wages in the long run?

Describe the concept of an inflationary gap and its effects on the economy.

How does a recessionary gap affect aggregate demand and supply?