Pack 3: Aggregate demand and supply Flashcards
What is aggregate demand?
Total demand for goods/services in economy during a time period
What is consumption?
Total amount household spend on goods/services over period of time
What is saving?
Part of disposable income household don’t spend on goods/services over period of time
What is disposable income?
Money individual receives after having paid any direct taxes and received any transfer payments or benefits
What is investment?
Spending on capital goods which can be used to make products to sell
What is gross investment?
Spending on capital goods, before depreciation taken into account
What is net investment?
Spending on capital goods, after depreciation taken into account
What is government expenditure?
Sum total of spending by both local and national government
What are net exports?
The value of exports minus the value of imports (X-M)
What is exchange rate?
The price of one currency in terms of another
What is exchange rate?
Price of one currency in terms of another
What factors influence net exports?
~Incomes
~Inflation
~State of world economy
~Degree of protectionism
~Quality/design
What is aggregate supply?
Total supply of goods and services produced within economy at given price level and period of time
What are the main differences of the Keynesian LRAS curve?
~LRAS where markets don’t clear and there’s spare capacity in economy
~Wages are sticky downwards
