Aggregate demand

Aggregate demand

• total planned expenditure on goods and services
• consumption + investment+ gov spending+exports- imports
• doward sloping

Consumption

• spending by households on goods& services
• 65% of AD
• how much people spend at various price levels
• consumer confidence affects it- higher spend more vice versa
• interest rates effect it - higher = less spending vice versa
• house prices- higher can spend more vice versa

Investment

• interest rates effect it - higher = less spending vice versa
• future sales patterns- if good will invest more vice versa
• gov incentives & regulations
• prospects…