Aggregate Demand and Aggregate Supply

Aggregate Demand

We will be deriving the aggregate demand from the money equation:

$$\begin{aligned} M \cdot V &= P \cdot Y_R \\ \%\Delta M + \%\Delta V &= \%\Delta P + \%\Delta Y_R \\ \vec{M} + \vec{V} &= \vec{P} + \vec{Y_R} \\ \vec{M} + \vec{V} &= \pi + \vec{Y_R} \end{aligned}$$
$$\pi = (\vec{M} + \vec{V}) - \vec{Y_R}$$
(AD)