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Positive Slope Model of Aggregate Demand

Author

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  • Naqellari Alqi

    (Lecturer, Mediterranean University of Albania)

Abstract

This paper analyzes Internal Aggregate Demand. This aggregate, along with other production indicators, is the main indicator of the country’s economic performance rate. Objective analysis is important for their perspective, as well as for a set of other related indicators, such as inflation rate, unemployment rate, etc. In economic theory, the Aggregate Demand Curve (AD) deals with negative slope. At the point where AD interrupts the AS (aggregate supply curve) there is macroeconomic equilibrium. Creating this equilibrium, shifting curves, creates a number of other figures that show how the level of output, prices and employment will be, and overall the level of economy in the future. In this study, with the data of the Albanian economy, was built, for a period of 17 years, the Internal Demand Curve. Three effects are analyzed: the real balance sheet effect, the interest rates and the external trade effect. The internal demand curve has resulted in a Positive Slope. The equilibrium is not created at the intersection point of the curves. These curves stand facing each other. The equilibrium is set by the different aggregate price level. The Gross Domestic Product Curve (GDP) is the equilibrium curve created by the interaction of Aggregate Demand and Aggregate Supply. This position is real, and creates opportunities for objective analysis of the economy. This paper uses econometric, statistical, comparative and synthesis methods.

Suggested Citation

  • Naqellari Alqi, 2018. "Positive Slope Model of Aggregate Demand," Academic Journal of Interdisciplinary Studies, Sciendo, vol. 7(3), pages 63-85, November.
    • Handle: RePEc:vrs:ajinst:v:7:y:2018:i:3:p:63-85:n:5
    DOI: 10.2478/ajis-2018-0059
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