Factors Causing An Outwards Shift in AD
A mindmap for ECON3 AQA to show the reaons why AD shifts outwards. Using C+I+G+(X-M)
- Created by: Gracey524
- Created on: 03-02-15 14:21
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- Factors Causing An Outwards Shift in AD (C+I+G+(X-M)
- Increase in Consumer Spending
- Increase in the demand of goods & services within society. These include durables (TVs, Cars etc) and non-durables (food&drink) which are consumed and the need for them to be replaced is essential
- Changes in Monetary Policy
- If interest rates fall, the cost of borrowing decreases as does the incentive to save
- Incentives firms to borrow and invest in R&D and better capital/training
- Increase in Investment
- Spending on capital goods such as machinery so they are able to become more efficient and produce consumer goods in the long run.
- Changes in Monetary Policy
- If interest rates fall, the cost of borrowing decreases as does the incentive to save
- Incentives firms to borrow and invest in R&D and better capital/training
- Changes in Monetary Policy
- Spending on capital goods such as machinery so they are able to become more efficient and produce consumer goods in the long run.
- Government Spending
- The spending on public goods and services. Essentially produces merit goods and positive externalities for society.
- Changes in Fiscal Policies
- Deacrease in income taxes incentives consumers to spend as they have more disposable income
- Increase in transfer payments - particularly if recipients spend a high % of what they get
- Exports
- An inflow of demand resulting in an injection of money into the country. Benefits the economy
- Imports
- Withdrawal of demand. A leakage from the countries net flow of income
- Economic Events In The International Economy
- A depreciation in the value of the pound results in imports becoming dearer and exports cheaper
- Increase in Consumer Spending
- An inflow of demand resulting in an injection of money into the country. Benefits the economy
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