Aggregate Demand Flashcards
Equation For AD
C + I +G + [X-M]
Macro Objectives
1. S_________ ________ ______
2. L__ ____________
3. P____ __________
4. S_________ B________ __ _________ ________
5. B_______ ___ ________
6. G______ ______ _______
7. P______ ___________
- Sustainable economic growth
- Low unemployment
- Price stability
- satisfactory balance of payments position
- Balanced gov. spending
- Greater income equality
- Protect environment
5 components of the CFD
Firms
Households
Financial
Government
Overseas
3 Withdrawals of the CFD
Tax
Saving
iMports
3 injections of the CFD
Gov spending
Investment
eXports
3 Government policies
Fiscal policy
Monetary
Supplyside
Consumption determinants
1. I______ ______
2. C________ __________
3. R___ __________ ________
4. W_____ _____
- Interest rates
- Consumer confidence
- Real Disposable income
- Wealth effects
Savings Determinants
1. R___ ___________ ________
2. I____ ______
3. C_________ __________
4. R_____ __ F_________ __________
5. G__ _______
6. A__ _________
- Real disposable income
- Interest rates
- Consumer confidence
- Range of financial institutions
- Gov Policies
- Age structure
Investment determinants
1. R___ __ __________ _________
2. A______ ________ / B______ _______
3. D_________ ___ _________
4. I_________ _____
5. A_______ __ _______
6. G__ _____________
- Rate of economic growth
- Animal spirits / Business confidence
- Demand for exports
- Interest rates
- Access to credit
- Gov regulations
Gov. Spending Determinants
1. T__ ____ _______
2. F_____ _______
- The trade Cycle
- Fiscal policy
Aspects of The Trade Cycle
peak
economic Downturn
Trough
economic boom
Formula for MPC
△C / △ Y
Formula for APC
C / Y
Formula for MPW
MPS + MPM + MPT
