Stuff. As in: half of the Supply-Demand Show, now airing Tuesday nights on NBC.
In Micro Econ, i.e. focus on the firm, supply usually refers to the raw materials that go into production. You have supplies in inventory. They get tweaked and melted and assembled and eventually become part of the whosamawhut.
At a Macro Econ level, supply refers to the stuff available for sale to a broad array of people. The early adopters willing to pay lots. The marginal adopter willing to pay...meh. The curve meets with demand in this fashion, and sales are made.
See: Supply-Demand Curve.
Related or Semi-related Video
![Econ: What is Aggregate Demand v. Aggregate Supply?](https://media1.shmoop.com/video/thumbnails/ECON.FINANCE.028_770x433.jpg)
Econ: What is Aggregate Demand v. Aggreg...13 Views
And finance Allah Shmoop What is aggregate demand versus aggregate
supply We're assuming you all know about supply and demand
Really Nothing The fundamental concepts of economics Anyone crickets were
not mad We're just disappointed in you But we'll go
over It quickly supplies the amount of something There is
like I'll imagine a warehouse one filled with Roquefort cheese
Row after row of shelves filled with you know pungently
stinky Roque for cheese that people want to eat voluntarily
so that supplies fly cheese All right Now demand out
there mostly in France and in small pockets throughout the
rest of the cheese eating world There are people who
love Roque for cheese They just want to stick its
moldy tang right into their mouths And actually like tasting
That's the demand People want the cheese right now to
aggregate supply and aggregate demand Well aggregate here just means
total Like in everything in all the world all the
demand added up and that equals aggregate demand All right
and all the supply added up and all that stuff
you have that equals aggregates supply Well these two terms
come up when you talk about an economy as a
whole Aggregate demand is that man for all goods and
services available in an economy All the cheese yes but
also all the haircuts the overrides the sushi dinners the
massages and fancy colorful drinks with little umbrellas in them
at all that up in a whole lot more That's
aggregate demand and also all the cars and appliances and
pianos and air conditioners and electricity and gasoline and furniture
And Kato diet shakes those everything Meanwhile you have aggregate
supply Well that's a total supply of all these goods
and services that an economy supplies all the output of
the makers or providers of haircuts and sushi dinners and
massages and fancy drinks as well as all the other
stuff that gets made in an economy will aggregate demand
can be affected by a few items and it's a
huge number so tiny little one percent d kind of
effects are still huge numbers All right so what affects
it Well one is the value of money so changes
in inflation expectations can either encourage people to buy more
stuff or encourage them to sock away money for the
future If people think inflation is going to be high
in the future well people may run out today and
buy stuff before prices go up This would increase aggregate
demand right If they're confident they're currency will hold its
value in the future People will be more likely to
save or invest their money well This a lower aggregate
demand as people put off purchases until later Will interest
rates play a role as well Here low interest rates
make borrowing and thus buying easier Low interest rates Allow
people to buy more big ticket stuff you know like
cars or houses or yachts On the other side of
the world there are some things that traditionally impact aggregates
Supply supply shocks can temporarily impact aggregates supply like of
a hurricane wipes out a major oil refinery or coal
area Or if a herd of elephants runs rampant in
the country's strategic peanut reserve Or there's a zombie apocalypse
leading workers to exit the region So the cost of
labor then goes up right because when your toilets overflowing
you don't care what your pain for that plumbing Or
there's a rare goat disease that cuts into cheese production
you know or at least adds to production costs So
now all of a sudden there's less supply of cheap
goat cheese There's only the expensive greenhouse grown goat cheese
and still the same amount of demand So supplies your
last and then and then costs go up right It's
also productivity gains from technology can impact aggregate demand That's
another factor here of force As the economy gets better
it producing things it can make more stuff from the
same supply or same amount of resource is so of
robots could suddenly make muffins for five cents each instead
of the twelve cents each it cost When humans make
him well then aggregate demand for muffins would probably go
up because they suddenly got a whole lot cheaper Thank
you Mr Robot Danger Danger What does that mean from
an investment side Well if companies invest less because of
negative expectations higher taxes or higher borrowing costs well then
everything shifts to the left meaning it cools down There's
less volume being traded around less supply less demand because
the higher borrowing costs have added friction to the process
And usually governments do that when they're afraid of high
inflation spiraling out of control and they raise the central
bank rates around the world or the Fed in the
U S so remember again the very small changes and
things like borrowing costs just a half a percent or
something on fifty trillion dollars Sloshing around out there have
enormous effects on the marginal supply and marginal demand volumes
that you know get put through the system You know
I think about a drainpipe in a heavy rainstorm that's
totally full of rain and suddenly that big pipe contracts
happen inch in diameter Well bad things happen to the
other end So back to our mad goat disease Well
if robots find a way to mold cheese more efficiently
and make it cheaper by the pound while there's going
to be more rope for to go around and then
think about all of this applied to globally lower interest
rates like even the difference of one percent globally in
a desa trillion dollar economy one percent All that borrowing
is a massive number So if they lower interest rates
you'll be able to borrow more money to be able
to buy all the high end stinky cheese when you
could get your hands on So yeah I think about
aggregate demand aggregate supply their huge numbers across the whole
global economy So very small things still affect a ton 00:05:27.77 --> [endTime] of people a lot Yeah
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