1
Q
What is aggregate demand
A
Total real expenditure on goods and services produced within a country in a given time period
2
Q
What are the components of aggregate demand
A
- consumption (C)
- Investment (I)
- Government spending (G)
- Exports (X)
- Imports (M)
3
Q
The real income effect
A
- price level falls
- real value of income rises
- consumers able to buy more of what they want or need
4
Q
The balance of trade effect
A
- price level decreases
- exports become more competitive
- greater demand
- greater export revenue
5
Q
The interest rate effect
A
- price level decreases
- interest rates kept lower
- stimulates high consumption/investment
6
Q
External shocks affecting aggregate demand
A
- rise or fall in value of exchange rate
- a recession in a nations key trading partner
- slump in the housing market/construction sector
- events such as global financial crisis
- global health crisis such as covid 19
AS Edexcel Economics
flashcards
Decks in class (25)
# Cards
-
2.1.1 - Economic Growth21
-
2.1.2 - Inflation22
-
2.1.3 - Unemployment13
-
2.1.4 - Balance of payments11
-
2.2.1 - Aggregate Demand6
-
2.2.2 - Consumption8
-
2.2.3 - Investment6
-
2.2.4 - Government Spending9
-
2.2.5 - Net Trade (X-M)4
-
2.3.1 - Characteristics Of Aggregate Supply3
-
2.3.2 - Short Run Aggregate Supply6
-
2.3.3 - Long Run Aggregate Supply5
-
1.1.1 - 1.1.3 Economics as a Social Science10
-
1.1.4 - PPF8
-
2.4.1 - National Income10
-
2.4.2 - Injections and Withdrawals3
-
2.4.3 - Equilibrium Real National Output6
-
2.4.4 - The Multiplier10
-
2.5.1 - Causes of Economic Growth6
-
2.5.2 - Output Gaps4
-
2.5.3 - Trade Cycle7
-
2.5.4 - Impact of Economic Growth3
-
2.6.1 - Macroeconomic objectives1
-
2.6.2 - Demand side policies7
-
AS Microeconomics application21
