Define Aggregate Demand.

What does the aggregate demand curve measure?

How is the AD curve drawn?

How does the inverse relationship determine the outcome of a rise and a fall in the price level?

What are the 4 componenets of aggregate demand?

Define consumption as a component of aggregate demand.

What are the 4 factors that determine consumption?

How does income affect consumption?

How is income calculated?

What is wealth and what is the key physical form for a person?

What wealth effects are likely to occur during a rise in property prices?

What are the 3 types of credit?

What are the 3 determinants for household borrowing?

How do interest rates affect aggregate demand?

What are expectations?

How are future expectations likely to affect consumption?

Define savings.

What is used to measure savings?

How do falling interest rates cause a decline in the savings ratio?

How do falling levels of unemployment lead to a decline in the savings ratio?

How does the falling price of consumer durables cause a decine in the savings ratio?

How does a wider availability of credit cause a fall in the savings ratio?

How do rising house prices cause a decline in the savings ratio?

What is positve equity and equity withdrawal?

What is negative equity and when is it most likely to occur?

How does a recession lead to negative equity and a fall in real national income?

How does the use of credit in order to increase consumption have some negative consequences?

Define Investment.

What are the 2 types of capital?

What is gross investment?

What is net investment?

What are the 2 areas where investment takes place?

What affect will investment have on the economy?

How will the level of consumer demand affect investment?

How will the rate of interest affect the level of investment?

How will a change in the cost of capital goods affect investment?

How can improvements in technology increase the level of investment?

How will expectations and Business Confidence increase the level of investmet?

How do government policies affect investment?