2.3.2 - Aggregate demand (AD)

The concept of AD. characteristics.

Use a - concept of ad. characteristics to connect the rule to the data and decision in the question.

This matters because a - concept of ad. characteristics determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply a - concept of ad. characteristics to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: a - concept of AD. characteristics is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

Components of aggregate demand: of AD; C + I + G + (X-M) =; the AD curve.

Use b - components of aggregate demand: of ad • c + i + g + (x-m) = • the ad curve to connect the rule to the data and decision in the question.

This matters because b - components of aggregate demand: of ad • c + i + g + (x-m) = • the ad curve determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply b - components of aggregate demand: of ad • c + i + g + (x-m) = • the ad curve to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: b - Components of aggregate demand: of AD • C + I + G + (X-M) = • the AD curve is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

The distinction between a movement along, and a shift of, the AD curve.

Use c - distinction between a movement along, and a shift of, the ad curve to connect the rule to the data and decision in the question.

This matters because c - distinction between a movement along, and a shift of, the ad curve determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply c - distinction between a movement along, and a shift of, the ad curve to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: c - distinction between a movement along, and a shift of, the AD curve is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

Influences on consumption:; disposable income; interest rates; consumer confidence; level of welfare payments; wealth effects; availability of credit.

Use a - influences on consumption: • disposable income • interest rates • consumer confidence • to connect the rule to the data and decision in the question.

This matters because a - influences on consumption: • disposable income • interest rates • consumer confidence • determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply a - influences on consumption: • disposable income • interest rates • consumer confidence • to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: a - Influences on consumption: • disposable income • interest rates • consumer confidence • is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

The relationship between savings and consumption.

Use b - relationship between savings and consumption to connect the rule to the data and decision in the question.

This matters because b - relationship between savings and consumption determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply b - relationship between savings and consumption to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: b - relationship between savings and consumption is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

The definition of the 'savings ratio'.

Use c - definition of the 'savings ratio' to connect the rule to the data and decision in the question.

This matters because c - definition of the 'savings ratio' determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply c - definition of the 'savings ratio' to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: c - definition of the 'savings ratio' is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

Causes and effects of changes in the savings ratio.

Use d - causes and effects of changes in the savings ratio to connect the rule to the data and decision in the question.

This matters because d - causes and effects of changes in the savings ratio determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply d - causes and effects of changes in the savings ratio to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: d - Causes and effects of changes in the savings ratio is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

The distinction between gross investment and net investment.

Use a - distinction between gross investment and net investment to connect the rule to the data and decision in the question.

This matters because a - distinction between gross investment and net investment determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply a - distinction between gross investment and net investment to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: a - distinction between gross investment and net investment is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

Influences on investment:; the rate of economic growth; interest rates; business confidence and expectations; availability of credit; tax on company profits.

Use b - influences on investment: • the rate of economic growth • interest rates • business to connect the rule to the data and decision in the question.

This matters because b - influences on investment: • the rate of economic growth • interest rates • business determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply b - influences on investment: • the rate of economic growth • interest rates • business to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: b - Influences on investment: • the rate of economic growth • interest rates • business is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

Government policy to promote investment:; tax relief; subsidies; reductions on the rate of corporation tax.

Use c - government policy to promote investment: • tax relief • subsidies • reductions on the to connect the rule to the data and decision in the question.

This matters because c - government policy to promote investment: • tax relief • subsidies • reductions on the determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply c - government policy to promote investment: • tax relief • subsidies • reductions on the to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: c - Government policy to promote investment: • tax relief • subsidies • reductions on the is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

Influences on government expenditure: expenditure (G); fiscal policy; the level of economic activity; correction of market failures; political priorities.

Use a - influences on government expenditure: expenditure (g) • fiscal policy • the level of to connect the rule to the data and decision in the question.

This matters because a - influences on government expenditure: expenditure (g) • fiscal policy • the level of determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply a - influences on government expenditure: expenditure (g) • fiscal policy • the level of to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: a - Influences on government expenditure: expenditure (G) • fiscal policy • the level of is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.

The impact on the net trade balance of changes in: (X-M); real income; the exchange rate; the state of the global economy; degree of protectionism; non-price factors.

Use a - impact on the net trade balance of changes in: (x-m) • real income • the exchange rate to connect the rule to the data and decision in the question.

This matters because a - impact on the net trade balance of changes in: (x-m) • real income • the exchange rate determines what can be inferred or chosen; begin with the stated conditions and keep the conclusion tied to the evidence.

Example: apply a - impact on the net trade balance of changes in: (x-m) • real income • the exchange rate to one small, clearly defined case, show the key step or comparison, and explain the result in words.

Boundary: a - impact on the net trade balance of changes in: (X-M) • real income • the exchange rate is not a universal recommendation. Check the syllabus scope, assumptions, units and the limits of the evidence before generalising.