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demand and you think that's downward sloping. I recognise that well, yes, aggregate demand is made-up of household demand. Loretta Dumas 41 minutes 35 seconds
demand and you think that's downward sloping. I recognise that well, yes, aggregate demand is made-up of household demand. Loretta Dumas 41 minutes 35 seconds Business demand, government demand and net overseas demand, OK, so. Loretta Dumas 41 minutes 42 seconds They're the components, but with monetary policy, we focus on three of those components being affected by aggregate demand and that's going to be household demand, which is consumer expenditure, OK. Loretta Dumas 41 minutes 55 seconds Business demand, which is going to be investment and you do need to know what these sort of mean. We don't focus on government, OK. Loretta Dumas 42 minutes 5 seconds Perhaps we should a little, but we don't so well. Let's not. And then we do talk about net exports, which is basically overseas demand, which is basically looking at the value of exports minus the value of imports. So what happens is we start at E1. So this is a macroeconomic equilibrium. Loretta Dumas 42 minutes 24 seconds OK, now over a year we would assume that most of these curves, unless it's a negative exogenous shock, would actually shift to the right, but we're not going to do that. We're going to simplify it. So we're going to keep short run aggregate supply where it is, which is you can see it's Ras is short run aggregate supply and we're going to keep long run aggregate supply. So we're not shifting everything. The only thing we're going to shift is aggregate demand. So that is an assumption we're making with the
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