Aggregate Demand 4.2.2 Flashcards
1
Q
What is AD?
A
The total amount of demand in the economy as a whole
2
Q
AD formula
A
AD = consumer spending + investments + gov spending + (exports - imports)
3
Q
What are the axis labelled as on an AD graph?
A
Y = price level
X = real national output
4
Q
How does the AD curve slope? Why?
A
Top left to bottom right. Because as the price decreases, more people will be willing to buy the product
5
Q
What does a shift of the AD curve to the right mean?
A
That AD has increased. This means that consumers are more willing to buy the product at any given price than previously
6
Q
What are the main factors affecting consumer spending?
A
