PPT On Macro Economic Models

Macro Economic Models Presentation
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Macro Economic Models Presentation Transcript: 
1.Macro economic models

2.Aggregate demand
Aggregate demand is the total spending on goods and services in a period of time at a given price level.
Components-
C-Consumption
I-Investment
G-Government Purchases
Net exports (X-M) where;
M: Imports of goods and services
X: Exports of goods and services

3.AD=C+G+I+(X-M)
C-Consumption is spending by households on goods and services. Goods include household spending on durable goods and non durable goods

I-Investment is the purchase of goods that will be used in the future to produce more goods and services. It is the sum of purchases of capital equipment, inventories and structures.

G-Government Purchases include spending on goods and services by local, state and central governments. It includes the salaries of government workers as well as expenditures on public works

Net exports (X-M) reflect the net effect of international trade on the level of aggregate demand. Exports sold overseas are an inflow of demand .Imports are a withdrawal of demand

4.Why AD curve slopes downwards
The open economy effect
Interest rate effect
The real-balance effect

5.Changes in AD

6.Factors causing a change in components of AD
Change in Consumption
Change in Investment
Changes in net exports
Change in Government Expenditure

7.Aggregate Supply
Aggregate supply is the total amount of goods and services that all industries in the economy will produce at every given price level.

8.Changes in AS

9.Factors causing a shift of SRAS
Changes in wages
Price of raw material
Change in Taxes
Changes in Subsides
Change in price of imports
Increase in productivity

10.Long run AS curve`The new-classical view (monetarist or free market view)