Determinants of Aggregate Demand and Supply

Created by luke_baeckelandt 

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The 4 determinates of aggregate demand

1.Changes in consumption
2. Changes in Investment Spending
3.Changes in Government Policy
4. Changes in Net Exports

The 3 determinants of aggregate supply

1. Changes in Resource Prices
2. Changes in Productivity
3. Changes in Business Taxes and Regulations

Changes in consumption

a.Consumer Wealth
b. Consumer expectations
c. Household Borrowing
d. Household Taxes

Changes in Investment spending

a. Interest rates
b. Expected Returns

Expected Returns

1.Future conditions
2. technological change
3. capacity
4. Business costs

Changes in Gov't policy

a. Fiscal policy(Gov't spending and taxation)
b. monetary policy(money supply and interest rates)

Changes in Net exports

a. exchange rates
b. Gov't trade policies

Changes in resource prices

a. Wages
b. Commodity prices

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