The Aggregate Demand and Supply (AD-AS) framework is a key way to understand how the economy works. It shows how total spending in an economy connects with how much is produced.
Aggregate Demand (AD): This means the total demand for all goods and services at different prices. It’s affected by things like what people buy, business investments, government spending, and trade with other countries.
Aggregate Supply (AS): This shows the total amount of goods and services produced at various price levels.
Understanding Inflation: In 2021, the UK had an inflation rate of 3.1%. This showed changes in both AD and AS.
Signs of a Recession: In 2020, the economy shrank by 9.9% because people and businesses were less confident, leading to lower AD.
Making Government Policies: When there are changes in the AD curve, governments can tweak their strategies to help boost the economy during tough times.
By looking at these changes, leaders can make smart choices to help keep the economy stable.
The Aggregate Demand and Supply (AD-AS) framework is a key way to understand how the economy works. It shows how total spending in an economy connects with how much is produced.
Aggregate Demand (AD): This means the total demand for all goods and services at different prices. It’s affected by things like what people buy, business investments, government spending, and trade with other countries.
Aggregate Supply (AS): This shows the total amount of goods and services produced at various price levels.
Understanding Inflation: In 2021, the UK had an inflation rate of 3.1%. This showed changes in both AD and AS.
Signs of a Recession: In 2020, the economy shrank by 9.9% because people and businesses were less confident, leading to lower AD.
Making Government Policies: When there are changes in the AD curve, governments can tweak their strategies to help boost the economy during tough times.
By looking at these changes, leaders can make smart choices to help keep the economy stable.