Aggregate demand Flashcards
(8 cards)
1
Q
Define aggregate demand
A
AD is total spending on goods and services over a period of time being used to calculate GDP and measure economic growth
2
Q
What are the 4 components of AD
A
Consumption
Investments
Government Spending
Net Exports
3
Q
What causes a movement vs a shift of the curve
A
A movement along the curve is determined by inflation rates
A shift of the curve is a change in one of AD’s components
4
Q
What are some of the determinants of C (6)
A
- Income
- Unemployment
- Taxes
- Interest rates
- Consumer Confidence
- Wealth effects
5
Q
What are some of the determinants of I (4)
A
- Risk
- Government regulation
- Interest rates
- Business confidence
6
Q
What are some determinants of Net exports
A
- Exchange rate (short run vs long run)
- World economies/International relations
- Quality of goods
- Marginal propensity to import
7
Q
What is the difference between gross and net investment
A
gross is the total spent on capital goods and net is the real value of investments (with depreciation)
8
Q
What is the trade cycle
A
fluctuations in GDP
