Aggregate Demand Flashcards
1
Q
what is aggregate demand
A
the sum of all planned spending in an economy over a period of time
2
Q
what are the components of aggregate demand
A
consumption, investment, gov spending, exports and imports
3
Q
what is the formula for AD
A
C + I + G +(X-M)
4
Q
why does the AD curve slope downwards
A
a rise in price level reduces the amount consumed by households and causes exports to fall
5
Q
What causes a shift in AD
A
changes in:
- consumption
-investment
-gov spending
-net exports
