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Chapter 23 Aggregate Supply and Demand, the Growth Diamond, and Financial Shocks

Chapter Objectives

By the end of this chapter, students should be able to:

  1. Describe the aggregate demand (AD) curve and explain why it slopes downward.
  2. Describe what shifts the AD curve and explain why.
  3. Describe the short-run aggregate supply (AS) curve and explain why it slopes upward.
  4. Describe what shifts the short-run AS curve and explain why.
  5. Describe the long-run aggregate supply (ASL) curve, and explain why it is vertical and what shifts it.
  6. Explain the term long term and its importance for policymakers.
  7. Describe the growth diamond model of economic growth and its importance.
  8. Explain how financial shocks affect the real economy.