The Circular Flow of Income The?circular flow of income?is an?economic model?that illustrates?money flows?in an economy There is a simple model which shows the?money flows?between?households?and?fi...
Keynesian Versus Classical Long-run AS Long run aggregate supply (LRAS)?is influenced by a change in the?productive capacity?of the economy Productive capacity is changed by changes to the?quantity...
Factors Influencing Short-run AS There are multiple factors that can?influence?the?short-run aggregate supply (SRAS). These include: Changes in costs?of raw materials and energy Changes in?exchange...
The Aggregate Supply (AS) Curve Aggregate supply?is the total supply of goods/services produced within an economy at a?specific price level at a given time A diagram showing the upward sloping shor...
Influences on the Net Trade Balance The?net trade balance?is the difference between the?value?of the?exports and imports (X-M) The net trade balance is influenced by changes to real income,?exchang...
Influences on Government Expenditure Government expenditure is influenced by the?trade/business cycle?and spending linked to achieving?policy aims Government expenditure can happen on a?local level...
Gross & Net Investment Investment?is the total spending on?capital goods?by firms Investment helps to?increase the capacity?(production possibilities) of an economy Increased capacity = increas...
The Influence of Disposable Income On Consumption Disposable income?is the money that?households?have left from their?salary/wages?after they have paid their?taxes?and have received any?tran...
The Components of AD Aggregate demand (AD)?is the?total demand?for all goods/services in an economy at any given?average price level Its value is often calculated using the?expenditure approach AD?...
