2.2 Aggregate demand (AD) key definitions
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8 Terms
what is the definition of AD?
AD is the total demand for all goods/services in an economy at any given average price level.
what is the definition of consumption?
consumption is the total spending on goods/services by consumers (households) in an economy.
what is the definition of investment?
investment is the total spending on capital goods by firms.
what is the definition of government spending?
government spending is the total spending by the government in an economy.
what is the definition of net trade?
net trade is the difference between the value of exports and imports (x-m).
what is the definition of gross investment?
gross investment is the total amount of spending on capital goods by firms.
what is the definition of net investment?
net investment is the gross investment- depreciation.
what is the definition of the trade/business cycle?
the trade cycle is the stages of economic growth an economy moves through including boom, slowdown, recession and recovery.