2.2 AD

Question 1

Aggregate Demand

Answer 1

total level of spending in an economy

Question 2

Formula for AD

Answer 2

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

Question 3

What is consumption?

Answer 3

this is how much consumers spend on goods and services

Question 4

What can influence consumption?

Answer 4

level of real disposable income, interest rates, consumer confidence, asset prices (wealth effect)

Question 5

What can influence investment?

Answer 5

interest rates, business confidence, corporation tax, spare capacity, level of comp

Question 6

What can influence govt spending?

Answer 6

trade cycle, fiscal policy

Question 7

What can influence net trade?

Answer 7

real incomes earned abroad (foreigners getting richer increases their MPI, exchange rates (SPICED + WIDEC)