Theme 2- Aggregate demand (key terms) Flashcards
1
Q
Consumption (C)
A
Total planned household expenditure on goods and services - all spending by consumers
2
Q
Aggregate demand (AD)
A
Total value of planned expenditure in an economy over a period of time
Formula:
AD = C+I+G+(X-M)
3
Q
Investment (I)
A
Spending by firms on capital goods, used to increase their future production; or additions to the stock of capital goods
4
Q
Government expenditure (G)
A
Spending by government on the provision of goods and services (NHS, Education, Defence etc)
5
Q
Net trade (X-M)
A
Exports minus Imports - balance of trade