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 ...
