Aggregate Demand Flashcards
Aggregate demand (AD) =
C+I+G+(X-M)
Define aggregate demand
Aggregate demand is the total demand for countries goods and services at a given price level in a given time period
Define consumer expenditure
Spending by households on consumer products
Define government spending
Spending by the government on goods and services
Define investment
Spending on capital goods
Define exports
Products sold abroad
Define imports
Products bought from abroad
Define net exports
Value of exports minus the value of imports
Define trade surplus
The value of exports is exceeding the value of imports
Define trade deficit
The value of imports is exceeding the value of exports
Define rate of interest
The charge for borrowing money, and the amount paid for lending money
What is consumer expenditure divided by disposable income called?
Average propensity to consume (APC)
Define average propensity to save (APS)
The proportion of disposable income saved divided by total disposable income
What is the extent to which firms are using the capital goods called?
Capacity utilisation
Retained profits are:
Profit kept by firms financial investment
