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Flashcards in AD Deck (15)
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1
Q

AD=

A

C + I + G + (X-M)

2
Q

AD

A

Total amount of planned spending on goods and services at any price level in an economy

3
Q

C

A

Spending by households on goods and services

4
Q

Main determinants of C (4)

A
  1. Interest rates
  2. Consumer confidence
  3. Wealth effects
  4. Level of employment
5
Q

I

A

An increase in the capital stock in an economy

6
Q

Main determinants of I (8)

A
  1. Rate of economic growth
  2. Confidence levels
  3. Interest rates
  4. Animal spirits
  5. Risk
  6. Access to credit
  7. Government decisions
  8. Government bureaucracy
7
Q

Gross investment

A

Total amount of investment before any account is taken of depreciation of assets

8
Q

Net investment

A

Takes into account the fall in value of assets

9
Q

G

A

Governments choose how much they spend & deliberately manipulate total spending in economy by changing their own level of spending

10
Q

Fiscal or budget deficit

A

When the government spends more than it earns in a financial year

11
Q

When does the government spend more?

A

In a recession- more transfer payments and less taxation

12
Q

Net exports

A

Export of goods and services meaning money is flowing into a country

13
Q

Causes of changes in net exports (5)

A
  1. Real income
  2. Change in the exchange rate
  3. Changes in the state of the world economy
  4. The degree of protectionism
  5. Non-price factors e.g. quality of engineering or reliability of after-sales services
14
Q

SPICED

A

Strong pound, imports cheap, exports dear (expensive)

15
Q

Fiscal policy

A

Government’s position or set of decisions on government spending, taxation (and borrowing) to achieve macroeconomic objectives