Household wealth influences the decision to spend money, impacting aggregate demand. This has a significant impact on the economy, especially where household spending makes a dominant contribution to GDP. In addition, the wealth effect may be
Aggregate Demand
Induced Expenditure: Examples, Formula
What's it: Induced expenditure is a type of expenditure where the amount varies with income. In macroeconomics, it represents spending by four macroeconomic sectors: household, business, government, and external. In this case, we are using real
Aggregate Demand Curve: Meaning, Sloping Reasons, Determinants
What's it: An aggregate demand curve is a graph showing the inverse relationship between aggregate demand and the price level. Aggregate demand represents the total demand from four macroeconomic sectors: household, business,
Capacity Utilization: Its Relationship With Profitability, Aggregate Demand and the Economy
What's it: Capacity utilization refers to the extent to which existing production capacity is used. It may refer to a company's machinery or production facilities. Or, we might find it to describe an industry or an economy aggregate. What is
Business Confidence: Its Effect on Aggregate Demand and the Economy
What's it: Business confidence describes how optimistic or pessimistic businesses are about their current and future operating and financial conditions. Several factors influence it, including economic conditions, consumer confidence, demand,
Consumer Confidence: Its Effect on Aggregate Demand and the Economy
What's it: Consumer confidence describes how optimistic and pessimistic consumers are about their daily lives. It is usually associated with their economic and financial condition. When consumers are optimistic about their economic and financial
Aggregate Demand: Formula, Components and Determinants
What's it: Aggregate demand (AD) is the sum of demand for goods and services in the economy at a given price level and a certain period. In the open economy, it comprises demand from four macroeconomic sectors: households, businesses, governments,