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The Concept of Aggregate Demand and Aggregate Supply

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Define the terms macroeconomics, the multiplier, and aggregate demand and supply.

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Solution Summary

The solution defines and differentiates aggregate demand and aggregate supply.

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Macroeconomics is the study of the totality of the economy. It studies the economy in whole or aggregates. The analogy of macroeconomics is this: assume that you are an eagle flying thousands of feet above. What you see are just specks of objects. That is Macroeconomics. If you want to see the parts, the eagle simply swoop down and you see the individual trees -- the microeconomics side. Macroeconomics studies the totality of the economy. A common variable in macroeconomics is the gross ...

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