2.2.1 - The characteristics of AD
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6 Terms
What is Aggregate Demand (AD)?
AD is the sum of all final demand for goods and services produced within the economy at a given price level
What is the sum for AD?
Consumption + Investment + Government Spending + (Exports - Imports) = AD
What is the level of importance?
Consumption, Government Spending, Investment, (Exports - Imports)
What percentages do they have of AD?
Consumption - 60 %
Government Spending - 25 %
Investment - 15 %
Trade Balance - -5 %
Why is the demand curve down sloping?
Because of the real balance effect - real purchasing power is lower causing demand to decrease in aggregate.
What a makes the AD curve shift?
An increase or decrease in the factors
