Aggregate Demand and Supply (Edexcel A-Level Economics A): Flashcards

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

Consumption (C) at ~64% of GDP

Proportion of additional income spent on consumption

Always equals 1

Expenditure by firms on physical capital

Gross investment minus depreciation

Independent of variables in AD/AS models

Downward sloping (inverse to price level)

Lower prices increase purchasing power, raising demand

Change in overall price level