AD Flashcards
1
Q
What’s affects consumption
A
Income
Confidence
Interest rates
2
Q
What affects investment
A
Cost
Confidence
Interest rates
3
Q
What affects government spending
A
State of the economy
4
Q
What affects the balance of trade
A
Protectionism
Incomes here/overseas
Exchange rate here/overseas
Inflation rate here/overseas
5
Q
What is the likely relationship between consumption and investment
A
Positive
In order to increase consumption there must be more produce so firstly there must be investment to aid for the growing consumption
If consumption rises, business confidence may rise so they invest more
