Chapter 9.1 Flashcards
Aggregate demand
The total amount of real output that consumers, firms, the government and foreigners want to buy at each possible price level, over a particular time period
Aggregate demand curve
Shows the relationship between the total amount of real output demanded by the four components and the economy’s price level over a particular period
Causes of changes in consumer spending
Change in consumer confidence
Changes in interest rates
Changes in wealth
Changes in income taxes
Changes in the level of household indebtedness
Expectations of future price levels
Consumer confidence
A measure of how optimistic consumers are about their future income and the future of the economy
Wealth
The value of assets that people own
Income tax
Taxes paid by households on their incomes
Household indebtedness
How much more people owe from borrowing in the past
Causes of changes in investment spending
Changes in business confidence
Changes in interest rates
Changes in technology
Changes in business tax
The level of corporate indebtedness
Legal/institutional changes
Business confidence
How optimistic firms are about their future sales and economic activity
Corporate indebtedness
How much debt a business has from borrowing in the past
Causes of changes in government spending
Changes in political priorities
Changes in economic priorities
Causes of changes in net exports
Changes in national income abroad
Changes in exchange rates
Changes in trade policies, or the level of trade protection
