Determinants Of AD (2)

Question 1

Price level

Answer 1

Average level of prices of all goods in the economy

Question 2

Real GDP on AD curve

Answer 2

A measure of nation income with the effect of inflation removed

Question 3

2 reasons why AD curve slopes down

Answer 3

When prices fall, consumers feel wealthy because real income has increased

When prices fall UK goods become more competitive abroad which increases exports and decreases imports