Aggregate demand

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  • Created by: Lottie
  • Created on: 14-03-12 10:05

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

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