GDP, AD and the Multiplier

Macro – Aggregate Demand and Aggregate Supply

In this course, Dr Paul Segal (King's College London) explores the interaction of the demand and supply sides of the economy. In the first module, we summarise AD, GDP and the multiplier as well as providing an introduction to how we apply these to analyse the macroeconomy. After that, in the second module, we introduce the supply side of the economy – particularly the determinants of productive capacity. In the third module, we introduce the Phillips Curve and explore how we use it to analyse business cycles. In the fourth module, we combine our understanding of AD and AS to analyse their interaction in the context of shocks before turning – in the fifth module – to how governments use fiscal and monetary policy in order to stabilise the economy.

GDP, AD and the Multiplier

In this module, we think about AD, GDP and the multiplier, focusing in particular on (i) breaking down the components of GDP or AD (ii) the relationship between income and expenditure and what this means for the multiplier process; (iii) the determinants of the multiplier; and (iv) the limitations of considering the demand side on its own.