Aggerate demand

Question 1

what is the definition of aggregate demand 


Answer 1

total planned real expenditure on a country’s goods and services produced within an economy in each time period

Question 2

what are the components of aggerate demand

Answer 2

-house hold spending on goods/services, consumption(C)
-capital investment spending, investment(I)
-govt spending on public services, govt spending(G)
-exports of goods and services(X)
-imports of goods and services(M)

Question 3

how can economies be categorised in terms of (x-m)


Answer 3

net exporter-exports>imports
net importer-imports>exports

Question 4

what is the largest component of aggerate demand 


Answer 4

consumption-60-66%

Question 5

what causes a shift in the AD curve


Answer 5

one or more components of AD changing

Question 6

what are the main causes to a shift in AD


Answer 6

-changes in real incomes and employment
-changes in govt spending, taxation and borrowing
-changes in monetary policy, interest rates and supply of credit, what banks are willing to lend
-changes in external value to exchange rate
-changes in rate of economic growth

Question 7

what is meant by business confidence 


Answer 7

describes forward looking expectations of firms

Question 8

what is meant by ‘animal spirits’


Answer 8

a term coined by Keynes to describe the fluctuating optimism/pessimism of investors and businesses