So this is where that moderate of inflation, really shows up.

And then our short run aggregate supply might look something like this, aggregate supply in the short run.

These goods are in great demand.

So the government does the auction.

If we lower the price of a product, that will raise the quantity demanded of that product.

We could charge 4.50 for the book.

If we talk about an actual quantity, we should say the quantity demanded.

Is there much demand for these goods?

And Deutsche Bank even said world oil use could peak around 2016.

Let me write that in green.

I'd rather have than just getting more of this thing right over here

And I had this captured market. You didn't need contracts.

So it's now at 4 and then that kills off a lot of the demand.

Or another way to think of it is, is this entire demand curve.

So in that case, even though the money supply is huge, or a lot larger than it was, people aren't expressing demand.

Now you can see some of the reasons why I'm optimistic.

Scenario B, I could raise the price by 2.

And so, for any given price point, the demand would increase.

Demand for housing near Tokyo skyrocketed.

Scenario E, I raise it to 10.

I should say how price relates to quantity demanded, and how quantity demanded relates to price.

Even the new Jack 2 field in the gulf of Mexico would only supply a few months of domestic demand.

So this right over here.

So we'll put price in the vertical axis and we'll put quantity demanded in the horizontal axis.

When everything else is equal and you're only changing price, you're not changing demand.

We're going to need all the help we can get.

This guy needs less cash, so it lowers demand.

If the price is lower, more people are going to want to buy it

And then more people buy.

This is the total numbers of cupcakes all of the factories in the market can produce.

This column let me put my price.

And so if income goes up for this laptop, the demand will increase.

Well for the price of anything to increase, what has to happen?

And in those cupcake economics videos, I showed that if the demand is pushing up against capacity.

In short, there was a lot of water and there weren't very many people.

If a lot of people want to buy it, there's a lot of demand relative to the supply.

The price varies with demand.

So now when they sell these shares in this entity, people are going to give them, well, hopefully more than what they paid for it, right?

So I'm going to let you think about that a little bit.

It just tells us that if we raise the price of a product, that will lower the quantity demanded for the product.

Here is the demand forecast for 1998.

Imported cars are in strong demand.

At any given price point, we are going to have a larger quantity demanded.

The supply demand balance is tight.

They decide to sell their house.