Aggregate Demand 1.5 / 5 based on 2 ratings ? EconomicsAggregate Demand and SupplyASAQA Created by: Ruby PorterCreated on: 17-11-13 19:18 What is Aggregate Demand? The total spending on real national output that all the economic agents in the economy wish to undertake 1 of 9 What is the equation for AD? AD = C + I + G + (X - M) 2 of 9 When consumption rises... Saving falls (and vice versa) 3 of 9 What are the 6 determinants of consumption? Interest Rates, Level of Income, Expectations about future income, Wealth, Consumer Confidence, Availability of Credit 4 of 9 When interest rates rise... consumption falls because the reward for saving is greater 5 of 9 As income rises, consumption will... Increase. Higher income households spend more but also save more. 6 of 9 What are the 6 determinants of Investment? Investment, Rate of Interest, Business Confidence, Technical Progress, Relative prices of Capital and Labour, Accelerator 7 of 9 What is the accelerator? This is the link between the current output and investment into capital needed for the future output 8 of 9 What is a budget deficit (in the government sector) This is when gov. spending is more than taxation. This represents an expansionary fiscal policy. 9 of 9
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