Aggregate Demand - AP Macroeconomics

Increases AD. Lower energy costs reduce production expenses and consumer prices.

Increases AD through investment and productivity. Innovation spurs business investment and consumer demand.

Decreases AD. Higher debt reduces disposable income available for consumption.

Increase AD. Government transfers boost disposable income and consumption.

Increases AD. Better infrastructure increases productivity and business investment.

Increases AD. Lower imports improve the net export component $(X - M)$.

Increases AD. Higher exports directly increase the net export component.

Investment. Business investment fluctuates most with economic conditions.

Increases real GDP. Higher demand leads to increased production and employment.

Imports. Goods and services purchased from foreign countries.

Through changes in G and taxes. Government directly controls spending and indirectly affects consumption.

Expectations of higher prices increase AD now. People buy now to avoid expected higher future prices.

I. Represents business spending on capital goods and inventory.

AD = C + I + G + (X - M). Standard macroeconomic equation where $(X - M)$ represents net exports.

Through changes in interest rates. Central bank controls money supply and interest rates.

Decreases AD. Higher costs reduce business investment spending.

Increases AD. Lower taxes increase disposable income, boosting consumption.

Decreases AD. Strong currency makes exports expensive and imports cheaper.

Exports. Goods and services sold to foreign countries.

Increase in C, I, G, or (X - M). Any factor that increases spending shifts AD rightward.

Higher prices make exports expensive, reducing AD. Domestic goods become less competitive internationally.

Decrease in C, I, G, or (X - M). Any factor that reduces spending shifts AD leftward.

Higher price level decreases real wealth, reducing AD. Rising prices erode purchasing power of money holdings.

Inverse relationship. AD curve slopes downward due to wealth, interest rate, and net export effects.

Increased population increases AD. More people means greater total demand for goods and services.

Decreases AD. Higher rates reduce investment and consumption spending.

Consumer income. Income affects consumption, the largest AD component.

Consumption, Investment, Government Spending, Net Exports. The four spending categories that make up total economic demand.

G. Represents all government purchases of goods and services.