Using Supply and Demand to Analyze the Macro Economy

Economics is full of exciting plot t as we've talked about one way to think about business cycles used in the fed model. Today, we're going to turn to an alternative, but related approachs aggregate demand, an aggregate supply. So when a micro economist analyzes a market, like the market for apples, they'll forecast the quantity of apples that'll be produced and the price of those apples. How can we apply this to the macro economy? Think about the quantity of all the stuff we produce. That quantity is measured by g d p. And o think about the price of stuff. Add up the price of everything in that basket and you've got a snapshot of the price