Created by david.b.smith33
over 11 years ago
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Question | Answer |
Consumption | The total planned spending by households on real output produced within the economy. |
Investment | The total planned spending by firms on real output produced within the economy. |
Interest Rate | The rewards for lending savings and the cost of borrowing. |
Personal Savings Ratio | The actual personal savings divided by personal disposable income. |
Accelerator Effect | A change in the level of investment in new capital goods induced by a change in national income. |
Long Run Aggregate Supply | The economy's productive capacity. |
Supply side shock | Something that will either increase or reduce the costs and hence the supply side of all firms in an economy |
The 6 Determinants of Consumption | 1.Interest rates 2.Level of disposable income 3.Future expectations of income 4.Wealth 5.Consumer confidence 6.Availability of credit |
The 4 Determinants of Investment | 1.Expectations of entrepreneurs and investors 2.Interest rates 3.The nature of technological progress 4.Relative price of capital and labour |
Factors affecting Short Run Aggregate Supply | 1.Wage rates 2.Interest rates (banks) 3.Import prices (Raw materials etc) 4.Corporation Tax |
Factors affecting Long Run Aggregate Supply | 1.Technological progress 2.Attitudes and Enterprise 3.Macroeconomic Policies 4.Productivity (eg Labour) 5.Capital investment |
What is aggregate demand? | The total planned spending on real output produced in an economy. C + I + G + (X-M) |
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