Aggregate Demand

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

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
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.
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

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)...
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online