Circular Flow with Aggregate Demand

Question 1

aggregate demand

Answer 1

• the sum total of all of the demands from the parties in the circular flow model (households, businesses, and government)
• very similar to real GDP–both measure the real output of an economy
• equivalent to real output

Question 2

c - consumption

Answer 2

the demand from households for goods and services

Question 3

g - government spending

Answer 3

demand from businesses and households for services

Question 4

i - investment

Answer 4

demand from businesses for investments of capital, land, and labor

Question 5

net exports

Answer 5

exports minus imports

Question 6

what aspect of AD result in monetary gain from “factors of production” to households

Answer 6

investment

Question 7

which of the following gain income from taxes in the AD model

Answer 7

governments