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Unit 2 revision note

unit 2 detailed notes

AD=C+I+G+(X-M) C=consumer spending I=Investment G=Government spending (X-M)=net exports
factors affecting consumer spending 1.Real income 2.interest rates 3.wealth effect 4.consumer expectations, expected inflation encourages spending expected deflation encourage delayed purchase
Factors affecting savings 1.Interest rates 2.Real disposable income 3.expectations uncertainty about future(e.g low job security)makes households save more 4.
Factors affecting investment 1.Accelerator effect 2.interest rate 3.existing levels of spare capacity 4.corporation tax
Factors affecting government spending 1.political stance(austerity or spending) 2.time to next election
Factors affecting net exports Exchange rate UK inflation compared to other countries productivity
Created by: samfisher2013