Aggregate Demand

# Aggregate Demand - National Income The total amount of...

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Aggregate Demand Terms and Formulae Terms Aggregate Demand - The total demand for goods and services in an economy. Aggregate Supply - The total supply of goods and services in an economy. Crowding In - When government spending induces private investment. Crowding Out - When government spending reduces private investment. Demand Curve - A schedule that relates price to quantity demanded. Disposable Income - Income that may be spent after taxes are subtracted. Exogenous - A change resulting from conditions outside of an economic model. GDP - Gross domestic product is the total value of all goods and services produced within an economy. Income - Money taken in by a system, an individual, a firm, or an economy. Inflation - The year-to-year increase in the price level. Marginal Propensity to Consume - A number that describes the amount of an additional dollar of income that a consumer will spend rather than save. Money Supply - The total amount of currency and demand deposits that exists in an economy.
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Unformatted text preview: National Income - The total amount of money earned in an economy in a year. C.f. GDP. Net Exports - The difference between exports and imports. Nominal Interest Rate - The cost of borrowing money, unadjusted for inflation. Nominal Value - The value of something in current currency, unadjusted for inflation. Output - The amount of goods and services produced in an economy. This can be in quantity or in currency. Price Level - The overall level of prices within an economy. Real Exchange Rate - The rate that goods and services of one country can be traded for goods and services of another country. Real Interest Rate - The cost of borrowing money, adjusted for inflation. Real Value - The value of something in constant currency, adjusted for inflation. Formulae Formula for Output or income Y = C(Y - T) + I(r) + G + NX(e) = basic equation for aggregate demand = IS curve equation LM curve equation M/P = L(r,Y)...
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