By the end of this section you will be able to:

Explain how exchange rate shifting influences aggregate demand and supply
Explain how shifting exchange rates also can influence loans and banks

By the end of this section, you will be able to:

Explain the aggregate supply curve and how it relates to real GDP and potential GDP
Explain the aggregate demand curve and how it is influenced by price levels
Interpret the aggregate demand/aggregate supply model
Identify the point of equilibrium in the aggregate demand/aggregate supply model
Define short run aggregate supply and long run aggregate supply

In this chapter, you will learn about:
Macroeconomic Perspectives on Demand and Supply
Building a Model of Aggregate Demand and Aggregate Supply
Shifts in Aggregate Supply
Shifts in Aggregate Demand
How the AD/AS Model Incorporates Growth, Unemployment, and Inflation
Keynes’ Law and Say’s Law in the AD/AS Model

By the end of this section, you will be able to:

Explain merchandise trade balance, current account balance, and unilateral transfers
Identify components of the U.S. current account balance
Calculate the merchandise trade balance and current account balance using import and export data for a country

By the end of this section, you will be able to:

Explain real GDP, recessionary gaps, and inflationary gaps
Recognize the Keynesian AD/AS model
Identify the determining factors of both consumption expenditure and investment expenditure
Analyze the factors that determine government spending and net exports

By the end of this section, you will be able to:

Contrast traditional economies, command economies, and market economies
Explain gross domestic product (GDP)
Assess the importance and effects of globalization

Recognizing that a course in economics may seem daunting to some students, we have tried to make the writing clear and engaging. Clarity comes in part from the intuitive presentation style, but we have also integrated a number of pedagogical features that we believe make learning economic concepts and principles easier and more fun. These features are very student-focused. The chapters themselves are written using a “modular” format. In particular, chapters generally consist of three main content sections that break down a particular topic into manageable parts. Each content section contains not only an exposition of the material at hand but also learning objectives, summaries, examples, and problems. Each chapter is introduced with a story to motivate the material and each chapter ends with a wrap-up and additional problems. Our goal is to encourage active learning by including many examples and many problems of different types.