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aggregate demand - Coggle Diagram
aggregate demand
components for AD
net exports
exports substracted by imports
investment
gross fixed capital investments spending
spending by private firms on capital goods
value of change in inventories
consumption
household spending on goods and services
government spending
spengding on public goods subsidies infrasturcuture, etc
shifts for net exports
increase
rise in qualily of domestic products
increase in income aboard
currency devaluation
decrease
decrease in income abroad
decrease in quality of domestic product and trend
increase in currency exchange rate
shitfs for consumtion
increase
rise in consumer confidence
cut in income tax
increase in population
increase in wealth
rise in money supply
decrease
decrease in consumer confidence
increase in income tax
decrease in income tax
increase in interest rate
decrease in population
shifts for investments
decrease
cut in corporate tax
technological advancements
rise in business confidence
increase
increase in interest rate
increase in corporate tax
AD
total level of planned real expendetire on goods and services at a certain amount of time
total demand for all goods and services in a n economy at a given time
formula
AD = C + I = G = (x-m)
AD = Consumption + investment + government spending + export - import
movement along the ad curve
the interest rate effect
rise in price level increase demand for money to pay for higher prices, which will result in higher interest rates decreases investment and consumption
the international effect
rise in price level reduce demand for net exports
the wealth effect
rise in price level reduce the amount of goods and services than people can buy, purchasing power also decreases