How the Macroeconomy Works (AQA A-Level Economics): Flashcards

AD/AS model

Total planned spending on goods & services in the economy

$AD = C + I + G + (X - M)$

Net exports (can be positive or negative)

Lower prices make exports more competitive, increasing demand

Upward sloping

Vertical line

Maximum output when economy is on its PPF (full capacity)

$AD = AS$

Sudden unexpected event that hits the economy