Karteikarten
6.1 ~ Aggregate Demand
Karten in diesem Stapel (27)
- 1What is the formula for ADAD = C + I + G (X-M)
- 2What does C stand for?consumption
- 3What does C include?D for durables + non-durables
- 4What does I stand for?capital investment
- 5What does I include?spending by firms and government on capital goods
- 6What does G stand for?government spending
- 7What does G include?spending on state provided goods + services
- 8What does (X-M) stand for?net exports
- 9What does (X-M) include?X sold overseas (injection) - M (withdrawal)
- 10What does it mean if (X-M) is positive?there is a trade surplus (adding to AD)
- 11What does it mean if (X-M) is negative?there is a trade deficit (reducing AD)
- 12What are shocks to AD?unexpected events that cause changes in the level of D, output + U
- 13What are some shocks to AD?change in ER
recession in trading partners
slump in housing P
an event like the credit crunch
unexpected change in D side policies - 14What is the relationship between AD and the PL?they have an inverse relationship (↑PL = contraction in AD)
- 15What are three examples of the relationship between AD and PL?falling real incomes
balance of trade
ir effect - 16Explain falling real Y in terms of AD and PL?↑PL = ↓Y = ↓C = ↓AD
- 17Explain the balance of trade in terms of AD and PL?a persistent ↑PL in country A = cheaper foreign M = ↓X and ↑M = ↓(X-M) = ↓AD
- 18Explain the ir effect in terms of AD and PL?if ↑PL = inflation = ↑D for money = ↑ir with a deflationary effect on the economy
- 19What are factors that cause a shift in AD? (6)changes in expectations
changes in MP
changes in FP
global economic events
changes in household wealth
changes in the S of credit - 20How do changing expectations shift AD?when ↓confidence = ↑saving therefore less I because of weak D + lower expected profits
- 21How do changes in MP shift AD?if ↓ir = ↓cost of borrowing + incentive to save = ↑C = ↑I = ↑AD
there are time lags!! - 22How do changes in FP shift AD?↑G = ↑I = ↑AD
↓T on Y = ↑Y = ↑ C = ↑ AD - 23How do global economic events shift AD?↓value of a currency = ↓P of X and M = ↑AD
↑Y overseas = ↑D for UK X = ↑(X-M) = ↓AD - 24How do changes in household wealth shift AD?changing share and property prices affect the level of wealth, declining asset prices can hit confidence
- 25How do changes in the S of credit shift AD?the availability of credit from the banking system is vital for the smooth functioning of most modern economies
- 26What causes a shift outwards of the AD curve? (4)↓X
↓G
↑ir
↓household wealth - 27What causes a shift inwards of the AD curve? (5)↓ER
↓T
↑house prices
expansion in S of credit
↓ir
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- Beschreibung
- AS - Level Economics (Macroeconomics) Karteikarten am 6.1 ~ Aggregate Demand, erstellt von Tara Pugal am 14/04/2016.
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- Tara Pugal
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