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Aggregate Demand


Aggregate demand (AD) is the total demand for all goods and services produced in an economy in a given
price level and time period.

AD = C + G + I + (X ­ M)

C means consumer expenditure. This makes up the majority of AD in…

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Increased real disposable income can result in households saving a higher proportion of income ­ their
average propensity to save rises. Rising interest rates encourage saving by offering a greater reward for
it. Reduced consumer confidence or increased uncertainty of the future can also result in increased
savings. The…

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Net Exports

Real disposable income abroad affects net exports. An increased income abroad is likely to increase
exports due to the increased demand. The US is a major trading partner to the UK; if incomes in the US
rise, they will buy more goods and services ­ some of…

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Aggregate Supply

Aggregate supply (AS) is the total output of goods and services that producers in an economy are willing
and able to supply at different price levels in a given time period.




In the long run (LRAS), the aggregate-supply curve is assumed to be vertical. It is closely…

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Changes in the government's fiscal policy relating to taxation and subsidies have effects on producers.
Increased taxation (could be through VAT or corporation tax) will cause an inwards shift in SRAS due to
the higher cost of production.




Long Run Aggregate Supply

Most supply-side policies are intended to improve…

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The result of this is that the price level will increase if AD
increases. This is shown on the diagram to the right.
Macroeconomic equilibrium shifts to a point where a
greater quantity of goods and services are produced at a
higher price level. But the increase in price…

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In most economies, both AD and AS will change over time. If an AS increase can match an AD increase,
the effect on price level of the two changes will cancel each other out, meaning that the output increases
without affecting the price level, thus reducing
inflationary pressures.

However,…

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This can also be illustrated on a PPC shifting outwards ­ a greater number of goods can be produced.

Benefits of economic growth

An increase in GDP per capita (total GDP divided by the population) increases the living
standards. Strong economic growth can reduce poverty levels in developing countries.…

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Point `A' barely represents the necessities. If a poor country tries
to increase production in capital goods by shifting from A to C,
there is a reduction in the number of consumer goods available.
This can be damaging to a country already suffering from a lack of
basic essentials.…

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survey totals all people who have looked for work in the past month and are able to start in two weeks.
The figure also includes those who have found a job and are waiting to start in the next two weeks.

On average, the labour force survey has exceeded…

Comments

davidsalter

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This 28 page document details AD, AS, macroeconomic indicators, government policy and international trade. It is an excellent resume that students can use as their notes or to create their own revision resources.

aashini14

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THIS IS GOLDEN

S1401615

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I'm resitting my AS F582 economics exam and I've legit been looking for something like this... this is absolutely heaven sent!!!

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