1.2 Aggregate Demand Flashcards
1
Q
What are the main components of AD
A
C+I+G+(X-M)
2
Q
Define AD
A
Total given demand in an economy at a given price level and a given time and price level
3
Q
What kind of relationship do PL and AD have
A
an inverse relationship
4
Q
Define consumption
A
the use of goods and services to satisfy wants
5
Q
Define disposable income
A
the income that households have to devote to consumption and saving
6
Q
Define wealth effect
A
the idea that an increase in an individual’s wealth will lead to an increase in their consumption
