Aggregate Demand and Aggregate Supply Flashcards Preview

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Flashcards in Aggregate Demand and Aggregate Supply Deck (8)
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0
Q

Aggregate Supply

A

The total amount supplied within an economy.

1
Q

Aggregate Demand

A

The total level of demand within an economy.

AD = C + G + I + (X- M)

2
Q

Consumption

A

Consumer spending on goods and services.

3
Q

Marginal Propensity to Consume (MPC)

A

The proportion of a change in income that is spent.

MPC = change in consumption/change in income

4
Q

Autonomous consumption

A

The consumption that is present even when no income is earned.

5
Q

Investment

A

Investment is the addition to the capital stock of the economy by firms – factories, machines, offices and stocks of materials, used to produce other goods and services.

6
Q

Full capacity

A

Normal rates of use of the factors of production.

7
Q

Price level

A

Average price of all goods and services within an economy.