University of London Aggregate Demand Curve Discussion

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1. Does the Aggregate Demand (AD) curve always slope downward? Discuss and use explanations (interest rate effect, wealth effects, open economy effect to illustrate your answer).

2. The Aggregate Supply (AS) curve slopes upward to reflect the profit motive of businesses. So, why are there two versions of the AS curve( i.e. short run and long- run). Discuss. Grading Rubrics

a. Define the term(s)

b. Offer an example to further illustrate your idea

c. Next, explain and state your conclusion. Have you answered the question(s)

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