Aggregate Demand is the total demand for final goods and services in an economy. AD = C+I+G+(X-M) C= consumer's expenditure on goods and services. AD curve slopes downwards Inverse relationship between Aggregate Demand and economy.
Aggregate Demand is the total demand for final goods and services in an economy. AD = C+I+G+(X-M) C= consumer's expenditure on goods and services. AD curve slopes downwards Inverse relationship between Aggregate Demand and economy.
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Aggregate Demand is the total demand for final goods and services in an economy. AD = C+I+G+(X-M) C= consumer's expenditure on goods and services. AD curve slopes downwards Inverse relationship between Aggregate Demand and economy.
Copyright:
Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPT, PDF, TXT or read online from Scribd
goods and services in an economy” AD = C+I+G+(X-M)
C= consumer’s expenditure on goods
and services. I= Capital investment G= Government spending X= Exports of goods and services M= imports of goods and services (X-M)= Net exports Demand shocks • Events such as changes in interest rates in the US will affect the UK, as 15% of our exports go to the USA. • Capital investment boom • Change in exchange rate • Consumer boom in one of our major trading partners countries • Boom in housing market or slump in share prices • Unexpected change in interest rates Aggregate demand curve Why AD curve slopes downwards Inverse relationship between aggregate demand and the economy. • Falling real incomes • Balance of trade • Interest rate effect Shifts in the AD curve Causes of AD shifts
• Changes in expectations • Changes in monetary policy • Changes in fiscal policy • Economic events in the international economy. • Changes in household wealth