|
DETERMINANTS of AD
__________
AD__________
|
__________
AD___________
|
C 
AD
|
C
AD
|
I
AD
|
I
AD
|
G
AD
|
G
AD
|
Xn
AD
|
Xn
AD
|
MS
Int. Rt.
I
AD
|
MS
Int. Rt.
I
AD
|
T
C
AD
|
T
C
AD
|
S
C
AD
|
S
C
AD
|
DETERMINANTS of AD
Consumption (C)
C
AD
C
AD
Investment (I)
I
AD
I
AD
Government Purchases (G)
G
AD
G
AD
Net Exports (Xn)
Xn
AD
Xn
AD
Money Supply (MS)
MS
Interest Rates
I
AD
MS
Interest Rates
I
AD
Taxes (T)
T
C
AD
T
C
AD
Saving (S)
S
C
AD
S
C
AD
DETERMINANTS of AD
C = consumer spending (and saving)
1. consumer
wealth
Wealth
C
AD
Wealth
C
AD
2. consumer
expectations
Expected future Income
C today
AD today
Expected future Income
C today
AD today
3. consumer
indebtedness
Consumer Debt
C
AD
Consumer Debt
C
AD
4. taxes
T
C
AD
T
C
AD
I = investment spending
1. interest rates (money
supply)
MS
Interest Rates
I
AD (memorize this)
MS
Interest Rates
I
AD
2. profit expectations on
investment projects
profit expectations
I
AD
profit expectations
I
AD
3. business taxes
Business Taxes
I
AD
Business Taxes
I
AD
4. technology improves
technology improves
I
AD
5. degree of excess
capacity
excess (unused) plant capacity
I
AD
excess
(unused) plant capacity
I
AD
G = government purchases (no
determinants)
Xn = net export spending
1. net income
abroad
Income in Foreign Countries
Xn
AD
Income in Foreign Countries
Xn
AD
2. exchange rates
value of the US dollar
Xn
AD
value of the US dollar
Xn
AD
DETERMINANTS of AS
__________
AS__________
|
___________
AS__________
|
price of resources
AS
|
price of resources
AS
|
productivity
AS
|
productivity
AS
|
business taxes and gov't red tape
AS
|
business taxes and gov't red tape
AS
|
DETERMINANTS of AS
Price of
Resources
price of resources
AS
price of resources
AS
Productivity of
Resources
productivity
AS
productivity
AS
Business Taxes and Gov't
Regulations
business taxes and gov't red tape
AS
business taxes and gov't red tape
AS
|
