Determinants of AD

FROM CLASS

  1. change in consumer spending (C)
  2. change in Investment spending (I)
  3. change in Government spending (G)
  4. change in Net Exports (Xn)
  5. change in Money Supply (S)
  6. change in Taxes (T)
  7. change in Saving (S)

FROM TEXT

a change in consumer spending (and saving) is caused by:
1) consumer wealth
2) consumer expectations
3) consumer indebtedness
4) taxes

a change in investment spending is caused by:

1) interest rates (money supply)
2) profit expectations on investment projects
3) business taxes
4) technology
5) degree of excess capacity

a change in government spending

a change in net export spending is caused by:

1) net income abroad
2) exchange rates

Determinants of AS

Change in input prices
1) labor
2) land (OPEC)
3) capital
4) entrepreneurial ability

Changes in the productivity of resources

Legal-institutional environment

1) business taxes and subsidies
2) government regulation (red-tape)