- Aggregate Demand: the total demand for final goods and services in the economy at a given time and price level.
- Aggregate Supply: the total supply of goods and services produced by a national economy during a specific time period.
- Equilibrium: For an economy in the short run is established when aggregate demand intersects with short run aggregate supply.
- Circular flow of income: the flow of income between producers and households who buy goods and services. Income moves from households to producers as the households purchase goods and services. Income moves from…