27 Flashcards
1
Q
Aggregate Demand
A
Total expenditure on goods and services produced within an economy in each time period
2
Q
factors of AD
A
C = Household spending
I = Investment
G = Government spending
X = Exports
M = Imports
3
Q
AD (EQ)
A
C + I + G + (X - M)
4
Q
Causes of a fall in AD
A
-> The wealth effect (Reduces amount of goods & services people can buy)
-> The international effect (Exports become less price competitive while imports become more price competitive)
-> The interest rate effect (Demand increases to pay for higher prices)
5
Q
The wealth effect
A
The effect on consumption from a change in wealth
