2 Aggregate demand The aggregate demand curve shows the relationship between the price level and the quantity of output demanded. For this chapter's introduction to the AD/AS model,we use a simple theory of aggregate demand based on the Quantity Theory of Money. Chapters 10-12 develop the theory of aggregate demand in more detail. CHAPTER 9 Introduction to Economic Fluctuations slide 8slide 8 § The aggregate demand curve shows the relationship between the price level and the quantity of output demanded. § For this chapter’s introduction to the AD/AS model, we use a simple theory of aggregate demand based on the Quantity Theory of Money. § Chapters 10-12 develop the theory of aggregate demand in more detail. 2