Question

EXPLAIN HOW THE AGGREGATE DEMAND AND AGGREGATE SUPPLY MODEL DIFFER FROM THE AGGREGATE EXPENDITURES MODEL

Answer 1

Aggregate demand model anf aggregate supply model is that in which at a given time and price level the total demand for financial goods and services in the economy. So that the change in the price level and income through the relationship of aggregate demand and aggregate supply are showned by the aggregate demand and aggregate supply model

But the aggregate expenditure model is the current value of all the goods and services.it is the sum of investment, consumption, goverment expenditure and net exports.

There is some variations are occur in the aggregate demand curve due to some factors like consumer income, price of substitute goods.

The change in cost of an input and technology cause shifts in aggregate supply curve

In the case of aggregate expenditure model the change occur in the price level will changes the aggregate expenditure because of the changes in consumption, investment, goverment expenditure and net exports so that it achieve a new equilibrium model