The total level of demand in an economy at a given price level.
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AD formula
C + I + G + (X-M)
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Yield (Y)
Earnings generated and realized on an investment over a particular period of time.
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Consumption
Consumer spending on goods and services
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Disposable Income
Money consumers have left available after taxes and benefits added.
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Investment
Increase in capital stock of an economy, leads to creating of real goods.
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Wealth
The value/stock of assets owned
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Government Spending
The expenditures of the Government
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Fiscal Policy
The use of borrowing, government spending and taxation to manipulate the level of AD and improve macroeconomic performance
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Types of Fiscal Policy
Discretionary- Implemented through policy change/ government action Automatic stabilisers- Policies used to offset fluctuations in economic cycle but do not need government intervention or regular policy change.
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Purpose of Fiscal Policy
Contractionary- Reduce AD Expansionary- Increase AD
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Exports (X)
Spending by foreign consumers on domestic goods and services.
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Imports (M)
Spending by domestic consumers on foreign produced goods and services.
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Net Trade (X-M)
The difference between the value of exports and imports of an economy.
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Exchange rate
The price of a currency in terms of another
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Aggregate Supply
The total amount of output of goods and services at a given price level in an economy.
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Short-Run Aggregate Supply (SRAS)
At least one factor of production is fixed
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Long-Run Aggregate Supply
A curve that shows the potential amount of real output that will be supplied in the economy in the long run at any given overall price level.
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Flashcard (20)