The document discusses key macroeconomic concepts including aggregate demand, aggregate supply, the consumption function, investment function, and the multiplier. It provides details on how each of these factors impact macroeconomic variables like output, employment, prices, and trade. It also examines the relationship between aggregate demand and supply using the AD-AS framework and how this intersection determines macroeconomic equilibrium.

9. Putting AD and AS together Prices output AS Y f AD Y 1 In this situation, the economy would be operating at less than capacity, there would be unemployment and the economy might be growing only slowly. AD 1 Y 2 A shift in the AD curve to AD1 as a result of a change in any or all of the factors affecting AD would increase growth, reduce unemployment but at a cost of higher inflation (a trade-off)

14. 45 degree model cons income C=a+bY 45Degree line Intersection with 45degree line gives y=c

15. 45 degree model

19. Shift of Investment Function: