Theme 2- Aggregate demand (key terms) Flashcards

1
Q

Consumption (C)

A

Total planned household expenditure on goods and services - all spending by consumers

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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)

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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

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4
Q

Government expenditure (G)

A

Spending by government on the provision of goods and services (NHS, Education, Defence etc)

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5
Q

Net trade (X-M)

A

Exports minus Imports - balance of trade

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