Agregate Demand

Question 1

What is the aggregate demand formula

Answer 1

C+I+GS+(x-m)

Question 2

What are increases or decreases along the AD curve caused by

Answer 2

An increase/decrease in income or taxes
An increase/ in interest rates or availability of credit
Inflation/deflation

Question 3

What causes a shift in the ad curve

Answer 3

A change in any of the components of AD e.g changes in C,I,GS or (X-M)

Question 4

Factors that causes shifts in AD

Answer 4

-taxation
-exhange rate
-disposable income
-government spending(e.g austerity)

Question 5

Factors that affect consumption

Answer 5

Taxation - disposable income affected
Interest rates - affect borrowing
consumer confidence - e.g wealth effect

Question 6

Factors that affect investment

Answer 6

• availability of credit and interest rates
• business confidence
  -taxation (direct and indirect tax)
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