27

Question 1

Aggregate Demand

Answer 1

Total expenditure on goods and services produced within an economy in each time period

Question 2

factors of AD

Answer 2

C = Household spending
I = Investment
G = Government spending
X = Exports
M = Imports

Question 3

AD (EQ)

Answer 3

C + I + G + (X - M)

Question 4

Causes of a fall in AD

Answer 4

-> The wealth effect (Reduces amount of goods & services people can buy)

-> The international effect (Exports become less price competitive while imports become more price competitive)

-> The interest rate effect (Demand increases to pay for higher prices)

Question 5

The wealth effect

Answer 5

The effect on consumption from a change in wealth