05 The AD/AS Model (part 2) AQA AS Economics (new spec) MACRO

This is one of a set of Powerpoints (and accompanying Notes/Key Terms sheets) that I have created for my own teaching of the macroeconomic topics in the new (linear) AQA AS Economics specification (7135). They follow the order of teaching recommended by the exam board and (generally) the AQA-approved textbook (Powell & Powell, 2015).

Key terms covered in this Powerpoint: (references to the specification):
3.2.2.4 Aggregate demand and the level of economic activity
• The role of AD in influencing the level of economic activity.
• The multiplier process and an explanation of why an initial change in expenditure may lead to a larger impact on local or national income.
3.2.2.5 Determinants of short-run aggregate supply
• The price level and production costs are the main determinants of the short-run AS.
• Changes in costs, such as: money wage rates, raw material prices, business taxation and productivity, will shift the short-run AS curve.
3.2.2.6 Determinants of long-run aggregate supply
• The fundamental determinants of long-run AS such as technology, productivity, attitudes, enterprise, factor mobility, and
economic incentives.
• The position of the vertical long-run AS curve represents the normal capacity level of output of the economy.