Total planned demand for goods and services produced within the economy over a given time period.
Components of AD are:
AD = Consumption + Investment + Government Spending + (Exports - Imports)
A fall or rise in any of the components of AD will cause AD to fall or rise respectively.
Tuesday, 2 August 2011
I know that exchange rates (as interesing as they are!) can sometimes be very difficult to get your head around so this powerpoint I made should help set things out clearly. It explains the exchange rate mechanism from freely floating to (rigidly) fixed as well as outlining the advantages and disadvantages of them.