AD

Question 1

AD equation

Answer 1

C+I+G+(X-M)

Question 2

What is aggregate demand

Answer 2

total demand for all goods and services in an

economy at ANY GIVEN PRICE LEVEL

Question 3

What does AD diagram have on the x-axis

Answer 3

RNO (real national output)

Question 4

How can we work out RNO

Answer 4

Money national output / Average price level

Question 5

When is there a shift in the LRAS

Answer 5

Change in productivity or quantity of factors of production

Question 6

When is there a shift in the SRAS

Answer 6

change in the cost of production in an economy

Question 7

Are unemployment and employment total opposites

Answer 7

Can rise or fall at the same time eg immigration can lead to rising employment and unemployment

Question 8

evaluation of lowering interest rates to increase AD

Answer 8

high street banks pass on cuts to consumers and willing to lend eg the credit crunch

Question 9

luxury good income elasticity

Answer 9

demand increases by a greater proportion than increase in income

Question 10

What is the problem of using nominal GDP to compare 2 different economies

Answer 10

Exchange rates r volatile, can be inaccurate