Chapter 33

Chapter 33 was focused on aggregate demand and supply, and explaining how they're different, as they take into consideration more factors and information that was not there before. The term "aggregate" means the the whole formed by different elements.  This is what "aggregate" is used for in this chapter.  Economists use these to study the short-term economic fluctuations.  One of the facts relating to economic fluctuation is that they are unpredictable and irregular.  It is near to impossible when they are going to happen.  It is like a business cycle and happens every so often.  Also, during these fluctuations, most macroeconomic variables fluctuate together in the same way.   In addition, a common fact, is that when the output falls, unemployment rise.  This makes sense since if there is less output, there is less workers and that means more unemployment.  The aggregate demand curve is made up of the goods and services that households, firms, the government, and customers abroad want to but at each price level. If the price is too high, then there is less demand so the curve is downward sloping.  The aggregate supply curve is made up of the quantity goods and services that firms would want to produce and sell at each price level.  If the price is high, then there will be more supply, causing the supply curve to be upward-sloping.  There are many reasons for the aggregate curve to shift such as changes in consumption.  As you may be able to tell, the reasons for shifts in the curves, are somewhat close to the shifts discussed in chapter 4.  In this case, they are just discussed in broader terms.