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8 Cards in this Set
- Front
- Back
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What's the formula for AD? |
AD=C+I+G+(X-M) |
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AD curve slopes down because a lower price level will: |
-raise demand for net exports -increase purchasing power of households -reduce rate of interest, stimulating consumption and investment |
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What is Consumption? |
Spending by domestic households on all goods and services |
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What are the types of Consumption? |
-autonomous -induced |
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Factors affecting consumption |
-size of disposable income -expectations of future price and income -interest rates |
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What is Investment? |
Spending by firms on capital goods |
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What are the types of Investment? |
Net= gross (total pdtn of capital goods) - depreciation (investment used to replace worn out capital) |
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Factors affecting investment |
-interest rate -business confidence -cost of capital -innovation and tech -govt policy |
