C23 Aggregate Demand Flashcards
1
Q
What is aggregate demand?
A
Total of all demand in the economy at a given price level
2
Q
What is national expenditure?
A
AD = C (consumption) + I (investment) + G (government spending) + X (exports) - M (imports)
3
Q
What is price level?
A
The average level of price in the economy
4
Q
What is a change in the price level?
A
Inflation/ Deflation
5
Q
What causes a shift in AD (C)?
A
Consumer willingness to spend
Rate of interest
6
Q
What causes a shift in AD ( I) ?
A
Firm’s confidence
Increase in invesment
7
Q
What causes a shift in AD (G)?
A
Government spending more without increasing tax
