Aggregate Demand Flashcards
1
Q
What is the formula for aggregate demand?
A
C + I + G + (X - M)
2
Q
Give the factors affecting consumer spending.
A
real disposable income, interest rates, employment & job security
3
Q
What is aggregate demand?
A
the total amount of goods and services demanded in the economy at a given time and price level
4
Q
What is the definition of investment?
A
spending on capital goods such as new factories, technology and vehicles
5
Q
Give the factors that influence investment.
A
- expected future profits
- the price of labour & capital
- economic forecast
6
Q
What is the accelerator effect?
A
a relationship between planned capital investment and the rate of change of national income
7
Q
Give the factors affecting imports.
A
- relative prices of exports in world markets
- the exchange rate (SPICEE)
