Macroeconomics

‭Tastes and‬ ‭Preferences‬ ‭Change‬

‭Favorable →‬‭Shift:‬ ‭Right (overall demand increases).‬ ‭Unfavorable →‬‭Shift:‬ ‭Left (overall demand decreases).‬

‭↑ Income →‬‭Shift:‬ ‭Right (overall demand increases‬‭due to higher purchasing‬ ‭power).‬ ‭↓ Income →‬‭Shift:‬ ‭Left (overall demand decreases due‬‭to lower purchasing‬ ‭power).‬ ‭↑ Market and Population Size →‬‭Shift:‬ ‭Right (overall‬‭demand increases due‬ ‭to the increase in the number of consumers).‬ ‭↓ Market and Population Size →‬‭Shift:‬ ‭Left (overall‬‭demand decreases due to‬ ‭the decrease in the number of consumers).‬ ‭Expectation of ↑ Future Price →‬‭Shift:‬ ‭Right (demand‬‭increases based on‬ ‭anticipation: buy now, hold later).‬ ‭Expectation of ↓ Future Price →‬‭Shift:‬ ‭Left (demand‬‭decreases based on‬ ‭anticipation: hold now, buy later).‬ ‭↑Substitute Price →‬‭Shift:‬ ‭Right (demand increases‬‭as cheaper price attracts‬ ‭consumers).‬ ‭↓Substitute Price →‬‭Shift:‬ ‭Left (demand decreases‬‭as higher price‬ ‭discourages consumers).‬ ‭↑ Complement Price →‬‭Shift:‬ ‭Left (demand decreases‬‭due to costlier‬ ‭complementary goods).‬ ‭↓ Complement Price →‬‭Shift:‬ ‭Right (demand increases‬‭due to cheaper‬ ‭complementary goods).‬

‭Income Change‬

‭Market Size and‬ ‭Population Change‬

‭Expectations‬

‭Substitute Price‬

‭Complement Price‬

‭Individual Demand, Market Demand, and Aggregate Demand‬ ‭An‬ ‭individual‬‭demand‬ ‭curve‬‭represents‬‭the‬‭relationship‬‭between‬‭the‬‭price‬‭and‬‭quantity‬‭demanded‬‭by‬‭a‬ ‭single‬ ‭consumer.‬ ‭This‬ ‭demand‬ ‭curve‬ ‭is‬ ‭derived‬ ‭from‬ ‭an‬ ‭individual‬ ‭demand‬ ‭schedule.‬ ‭When‬ ‭all‬ ‭consumers’‬ ‭demands‬ ‭in‬ ‭a‬ ‭market‬ ‭are‬ ‭added‬ ‭together,‬ ‭we‬ ‭get‬ ‭the‬ ‭market‬ ‭demand‬ ‭curve‬ ‭(e.g.,‬ ‭the‬ ‭demand‬ ‭in‬ ‭the‬ ‭market‬ ‭for‬ ‭apples).‬ ‭This‬ ‭curve‬ ‭is‬ ‭the‬ ‭horizontal‬ ‭summation‬ ‭of‬ ‭all‬ ‭individual‬ ‭demand‬ ‭curves where quantity is plotted on the x-axis and price on the y-axis.‬ ‭The‬ ‭total‬‭amount‬‭of‬‭goods‬‭and‬‭services‬‭consumed‬‭by‬‭all‬‭the‬‭sectors‬‭and‬‭markets‬ ‭in‬‭an‬‭economy‬‭is‬ ‭referred‬‭to‬‭as‬‭the‬ ‭aggregate‬‭demand‬ ‭which‬‭is‬‭a‬‭macroeconomic‬‭topic‬‭that‬‭will‬‭be‬‭discussed‬‭later‬‭in‬‭this‬ ‭book. Aggregate demand affects market demand which is a microeconomics topic.‬ ‭Supply‬ ‭Supply‬ ‭refers to the quantity of goods and services‬‭that sellers are‬ ‭willing‬ ‭and‬ ‭capable‬ ‭of offering‬‭for‬ ‭sale in a market at various price levels.‬

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