Chapter 21 - Notes

• Aggregate Demand and Aggregate Supply
• Focuses on:
  • The quantity of output produced across the economy as a whole, measured by real GDP
  • The price of that output, measured by GDP deflator (Price of a basket containing the goods and services we produce)
    
• NOTE: doesn't explain price and quantity of any individual good, rather explains what's happening to total output and average prices across the whole economy
• the relevant opportunity cost of buying output today is that you can’t save your money so that you can buy more output in the future

Aggregate Demand

• Summarizes purchasing plans of all buyers throughout the economy
• Includes consumers, businesses, the government, and overseas customers
• Aggregate expenditure: the total

Aggregate Supply

• Summarizes production plans of all suppliers throughout the economy