IBDP Economics Chapter 9 Notes

aggregate demand & aggregate supply

STUDY NOTES FOR ECONOMICS CHAPTER 9 –  AGGREGATE DEMAND & AGGREGATE SUPPLY

These notes have specially been curated by expert teachers to simplify and enlighten concepts given in IB Aggregate Demand and Aggregate Supply HL. The notes are comprehensive in nature and are sufficient to study the chapter in depth and one need not look for other resources beyond the notes provided on our website which can be accessed for free. The notes for Aggregate Demand and Aggregate Supply IBDP HL are available on our official website and can be downloaded for free. The material made available on Tychr’s website is available for all IBDP subjects and is specially curated after an extensive amount of effort to ensure that the notes are in consonance with the IB curriculum and are an amalgamation from various textbooks prescribed by the IBO.

In this chapter we basically focus on aggregate demand and aggregate supply. We look at the concepts of the aggregate demand curve, the aggregate supply curve, the determinants of the shifts in aggregate demand and aggregate supply curves. The short run equilibrium in the ad as model is of importance and is explained through graphs. Similarly we also study the long run aggregate supply. The long run equilibrium in the new classical model emphasizes on the importance of price mechanism, concept of competitive market equilibrium and economy as a harmonious system that tends towards full employment and then there is the keynesian model with three states: the recessionary gap, the inflationary gap and the full employment equilibrium.

The illustrations for both the new classical and the keynesian models are of importance for the students to understand the concepts clearly. Next we’re introduced to the keynesian multiplier and its effect on the price level. Under the Keynesian cross model we study the desired consumption and desired investment spending, consumption function, autonomous and induced spending and equilibrium level of income and output. The keynesian multiplier shows the relationship between multiplier and MPC. It also introduces the students to turns like MPC- marginal propensity to consume, MPS-marginal propensity to save, MPT-marginal propensity to tax and MPM- marginal propensity to import. The students should be clear of all the concepts of the long run and the short run aggregate demand and aggregate supply curves and they should also practice the newly introduced graphs in order to have clarity and a strong foundation for the study of Economics.