Several factors affect consumption expenditure. Disposable income comes first. Without it, there is no income to buy the product. Other factors
What's it: A supply shock is a sudden and unexpected event causing a dramatic change in output. It can be positive or negative. It is positive if
What's it: Long-run aggregate supply (LRAS) refers to the total output produced in the economy when all inputs are variable. Wages and other
What's it: Consumer spending patterns are changes over time in the total money individuals spend on goods and services for personal use. It also
Exchange rates affect aggregate demand through their effects on exports and imports. Specifically, it affects the relative prices of imported or
Monetary policy affects aggregate demand and the economy through the money supply. For example, an increase in the money supply
Fiscal policy affects aggregate demand and economic activity through taxes and government spending changes. For example, tax cuts increase aggregate
Household wealth influences the decision to spend money, impacting aggregate demand. This has a significant impact on the economy, especially where
Economists measure economic activity using several approaches, namely income, expenditure, and output. All three will produce an equal number. How
What's it: A cyclical budget deficit is when government spending exceeds government revenue, and it occurs due to economic conditions. In other
What's it: Government discretionary spending is an item in government spending where the allocation is at the government's discretion and is
What's it: Government revenue is money earned by the government for carrying out its activities. Taxes are the main source. In addition, the
What's it: Government capital expenditure refers to spending to create long-term assets in the economy. An example is money spent on building
What's it: Government current expenditures represent spending on day-to-day operations, including administrative activities and public services.
What's it: Transfer payments are payments by the government to the private sector without having to pay for the goods and services provided.
What's it: National debt is money owed by the government to its creditors. The government owes money to cover the budget deficit, where