World gross economic product

In studying macroeconomics, the focal point is the whole economy versus markets for goods and services. This approach entails looking at the forces affecting growth, inflation, and unemployment at the aggregate level whether it is output, income, or the set of components within GDP.

In essence, macroeconomics involves studying demand and supply for all goods and services in a nation’s economy.

Aggregate demand is the total amount of goods and services people want to buy; in other words, it measures what people wish to purchase rather than what is actually produced.

Objectives

Upon successful completion, you will be able to:

• graphically represent and interpret a short-run aggregate supply curve, and explain why it slopes upward and factors leading to its shift outward or inward;
• define aggregate demand, and identify the reasons for its negative slope; and
• describe the four phases of a business cycle, including references to income and real output.