Aggregate demand, short-run aggregate supply, and long-run aggregate supply come together on one of the most notable models in macroeconomics. Students will learn how positive demand shocks cause short-run changes, followed by long-run changes, to real gross domestic product, price level, and unemployment changes in an economy.
Content Standard 1: Scarcity
Grade 12 Benchmark
2. Choices made by individuals, firms, or government officials often have long-run unintended consequences that can partially or entirely offset or supplement the initial effects of a decision.
Content Standard 3: Allocation
Grade 12 Benchmark
2. Comparing the benefits and costs of different allocation methods in order to choose the method that is most appropriate for some specific problem can result in more effective allocations and a more effective overall allocation system.
Content Standard 4: Incentives
Grade 12 Benchmarks
1. Acting as consumers, producers, workers, savers, investors, and citizens, people respond to incentives in order to allocate their scarce resources in ways that provide them the highest possible net benefits.
2. Decision-making in small and large firms, labor unions, educational institutions, and not-for-profit organizations has different goals and faces different rules and constraints. These goals, rules, and constraints influence the benefits and costs of those who work with or for those organizations, and, therefore, their behavior.
Content Standard 7: Markets and Prices
Grade 12 Benchmark
1. Market outcomes depend on the resources available to buyers and sellers, and on government policies.
Content Standard 8: Role of Prices
Grade 12 Benchmarks
1. Demand for a product changes when there is a change in consumers’ incomes, preferences, the prices of related products, or in the number of consumers in a market.
2. Supply of a product changes when there are changes in either the prices of the productive resources used to make the product, the technology used to make the product, the profit opportunities available to producers from selling other products, or the number of sellers in a market.
3. Changes in supply or demand cause relative prices to change; in turn, buyers and sellers adjust their purchase and sales decisions.
Standard 11: Money and Inflation
Grade 12 Benchmark
4. The annual inflation rate is the percentage change in the average prices of goods and services over a twelve month period.
Content Standard 13: Income
Grade 8 Benchmarks
1. Employers are willing to pay wages and salaries to workers because they expect to be able to sell the goods and services that those workers produce at prices high enough to cover the wages and salaries and all other costs of production.
3. A wage or salary is the price of labor; it usually is determined by the supply of and demand for labor.
