Aggregate demand
: The total of all demands or expenditures in the economy at any given price.
Aggregate demand curve
: Shows the relationship between the price level and equilibrium national income. As the price
level rises the equilibrium level of national income falls.
Animal spirits
: Bu...
1 Edexcel A -level Economics Theme 2.2 -2.4 Questions & Correct Answers/ Graded A+ Aggregate demand 🗸🗸: The total of all demands or expenditures in the economy at any given price. Aggregate demand curve 🗸🗸: Shows the relationship between the price level and equilibrium national income. As the price level rises the equilibrium leve l of national income falls. Animal spirits 🗸🗸: Business confidence: the mood of managers and owners of firms about the future of their industry and the wider economy. Investment 🗸🗸: The addition to the capital stock of the economy. Retained profit 🗸🗸: Profit kept back by a firm for its own use which is not distributed to shareholders or used to pay taxation. 2 Net exports or the net trade balance 🗸🗸: Exports minus imports. Aggregate supply curve 🗸🗸: The relationship between the average lev el of prices in the economy and the level of total output. Full capacity 🗸🗸: The level of output where no extra production can take place in the long run with existing resources. The full capacity level of output for an economy is shown by the classical long run aggregate supply curve or the vertical part of a Keynesian aggregate s upply curve. Short -run aggregate supply curve 🗸🗸: The upward sloping aggregate supply curve which assumes that money wage rates are fixed. Circular flow of income 🗸🗸: A model of the economy which shows the flow of goods, services and factors and th eir payments around the economy. Closed economy
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