ABSTRACT
Many textbooks begin their macroeconomic analysis by presenting. aggregate demand-and-supply curves that look very similar to shortrun demand-and-supply curves for a perfectly competitive industry. Students may easily suppose that one can get the aggregate demandand-supply curves simply by adding up such industry demand-andsupply curves. Before being given an alternative explanation, students should be told why simple aggregation does not work. The purpose of this essay is to show that there are problems with the concepts of aggregate demand and supply even as they are usually explained now. This will include a review of what it is legitimate to lock in caeteris paribus when drawing any demand-or-supply curve, and what we can legitimately treat as independent variables.
