ECO/372T: Principles Of Macroeconomics Wk 3 Discussion

Get Principles Of Macroeconomics Wk 3 Discussion answers for as low as $10. Reach out via live chat or email at to get assistance with your discussion assignments.

Respond to the following in a minimum of 175 words: 

The aggregate demand and the aggregate supply model allows us to examine how a variety of events can affect the economy.

  • Explain the shape of aggregate demand curve.
  • How do Classical and Keynesian economists differ in their view of the aggregate supply curve?
  • In your own words, discuss which of the four sources identified with aggregate demand has caused a change in the aggregate demand for a product or service you or your employer use.
  • Share the effect that source has had on how you or your employer contribute to the measurement of aggregate demand.


The laissez-faire philosophy, or a free market economy without government interference, is the foundation of classical economic theory. Economic resources are distributed in accordance with consumer and company preferences. Prices in the economic market are decided using the value theory. Value is determined by production output, technological advancements, and wages for producing the commodities. The evolution of classical economic theory may be significantly influenced by the consequences of inflation, government intervention, and taxation. Classical theory concentrates on long-term solutions to economic issues.

In Keynesian economics, the market is primarily defined by consumer spending and total demand. Keynesian economists contend that both governmental and private actions frequently affect aggregate demand. Government and local governments are considered public decision-makers, whereas people and corporations are considered private decision-makers. This theory mainly depends on the idea that a nation’s whole economy may be impacted by its monetary policies. It asserts that even in the absence of consumer spending or corporate investments, government expenditure and involvement may boost the economy.

According to a specific formula used by modern economists, changes in aggregate demand are brought about by adjustments to the values of the method’s response variables. They include, among other things, government consumption and spending, investment expenditures, government spending, exports, and imports. A number of variables, such as government expenditure and transfers as well as consumption and output, have an impact on consumer and producer demand for aggregate goods and services. The worth of one’s assets, as well as changes in earnings and taxation as well as future earnings estimates, may all affect consumer behavior.

The supply curve moves to the right as a result of monetary policy’s expansionary tendency. This rise in an economy’s nominal money stock has the added benefit of raising real money stock at every price level as well as the nominal money stock. With declining inflation, more people are becoming interested in real estate and other physical assets, which is leading to a rise in their accumulation.