The Components Of Aggregate Demand Flashcards
1
Q
What is aggregate demand?
A
It is the total spending on goods and services
2
Q
How is Aggregate demand calculated?
A
Consumption + investments + government spending + (exports - imports)
3
Q
Consumption and saving
A
are affected by a number of factors
4
Q
Dont confuse
A
Saving and investment
5
Q
Investment is
A
Made by firms
6
Q
Government spending doesnt
A
Include transfers of money
7
Q
Government spending doesn’t
A
Have to be equal to revenue
8
Q
An export to one country is
A
Always an import to another
9
Q
There are many factors that
A
Will affect imports and exports
10
Q
Factors that affect imports and exports
A
The exchange rate
Changes in the state of the world economy
Degree of protectionism
Non-price factors
