2.2 AD Flashcards
1
Q
Aggregate Demand
A
total level of spending in an economy
2
Q
Formula for AD
A
AD = C + I + G + (X-M)
3
Q
What is consumption?
A
this is how much consumers spend on goods and services
4
Q
What can influence consumption?
A
level of real disposable income, interest rates, consumer confidence, asset prices (wealth effect)
5
Q
What can influence investment?
A
interest rates, business confidence, corporation tax, spare capacity, level of comp
6
Q
What can influence govt spending?
A
trade cycle, fiscal policy
7
Q
What can influence net trade?
A
real incomes earned abroad (foreigners getting richer increases their MPI, exchange rates (SPICED + WIDEC)
