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AS Macroeconomics Edexcel Quick Question
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TheProKi
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Can someone explain how Greater Exports leads to Aggregate Demand to Increase?
Also what affect does imports have on Aggregate Demand (AD). Why does Reduced Imports and Rise in Exports mean AD increases (depreciation in currency)?
Doesn't Aggregate Demand mean, spending on goods on services so shouldnt imports rise Aggregate Demand since greater imports mean greater consumption?
Also what affect does imports have on Aggregate Demand (AD). Why does Reduced Imports and Rise in Exports mean AD increases (depreciation in currency)?
Doesn't Aggregate Demand mean, spending on goods on services so shouldnt imports rise Aggregate Demand since greater imports mean greater consumption?
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BirdIsWord
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#2
Just know the equation AD = Consumption + Gov spending + investment + (exports-imports)
I dont think you'd ever have to explain WHY it leads to an increase in AD.
I dont think you'd ever have to explain WHY it leads to an increase in AD.
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The gains kinggg
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#3
(Original post by TheProKi)
Can someone explain how Greater Exports leads to Aggregate Demand to Increase?
Also what affect does imports have on Aggregate Demand (AD). Why does Reduced Imports and Rise in Exports mean AD increases (depreciation in currency)?
Doesn't Aggregate Demand mean, spending on goods on services so shouldnt imports rise Aggregate Demand since greater imports mean greater consumption?
Can someone explain how Greater Exports leads to Aggregate Demand to Increase?
Also what affect does imports have on Aggregate Demand (AD). Why does Reduced Imports and Rise in Exports mean AD increases (depreciation in currency)?
Doesn't Aggregate Demand mean, spending on goods on services so shouldnt imports rise Aggregate Demand since greater imports mean greater consumption?
Increase in exports will lead to an increase in AD^
And again look at the equation
And again
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TheProKi
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#4
(Original post by The gains kinggg)
C+I+G+(X-M)
Increase in exports will lead to an increase in AD^
And again look at the equation
And again
C+I+G+(X-M)
Increase in exports will lead to an increase in AD^
And again look at the equation
And again
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TheProKi
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#5
(Original post by BirdIsWord)
Just know the equation AD = Consumption + Gov spending + investment + (exports-imports)
I dont think you'd ever have to explain WHY it leads to an increase in AD.
Just know the equation AD = Consumption + Gov spending + investment + (exports-imports)
I dont think you'd ever have to explain WHY it leads to an increase in AD.
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BirdIsWord
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#6
(Original post by TheProKi)
So we don't need to know why, are you 100% sure?
So we don't need to know why, are you 100% sure?
Thats just like saying Why does me receiving two apples increase the number of apples i have by two?
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TheProKi
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#7
(Original post by BirdIsWord)
like 99% sure yes.
Thats just like saying Why does me receiving two apples increase the number of apples i have by two?
like 99% sure yes.
Thats just like saying Why does me receiving two apples increase the number of apples i have by two?
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officialjaayjaay
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#8
Our economy is already in a current account deficit, if X is theoretically > M then the trade deficit improves,
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officialjaayjaay
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#9
therefor making the UK more internationally competitive, therefor causing AD to shift to the right
I think what your looking for is this:
if the UK are more internationally competitive, they're output is gonna appreciate, as output appreciate AD shifts right
I think what your looking for is this:
if the UK are more internationally competitive, they're output is gonna appreciate, as output appreciate AD shifts right
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Adams Gamertag
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#10
(Original post by TheProKi)
Lol thats not what im trying to say at all, im asking why does greater exports and reduced imports increase AD since AD is spending on goods and services so imports is like consumers spending on goods and services so shouldnt that increase AD not exports?
Lol thats not what im trying to say at all, im asking why does greater exports and reduced imports increase AD since AD is spending on goods and services so imports is like consumers spending on goods and services so shouldnt that increase AD not exports?
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TheProKi
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#11
(Original post by Adams Gamertag)
Aggregate demand is demand for domestic goods (key word being domestic), so exports are foreign countries buying 'our' goods, as a result money coming into the economy from abroad. Imports however involve 'us' buying goods and services from another country so our spending does not count as an injection into the domestic economy but the other country's. Does this answer your question?
Aggregate demand is demand for domestic goods (key word being domestic), so exports are foreign countries buying 'our' goods, as a result money coming into the economy from abroad. Imports however involve 'us' buying goods and services from another country so our spending does not count as an injection into the domestic economy but the other country's. Does this answer your question?
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Navroop99
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#12
(Original post by TheProKi)
Can someone explain how Greater Exports leads to Aggregate Demand to Increase?
Also what affect does imports have on Aggregate Demand (AD). Why does Reduced Imports and Rise in Exports mean AD increases (depreciation in currency)?
Doesn't Aggregate Demand mean, spending on goods on services so shouldnt imports rise Aggregate Demand since greater imports mean greater consumption?
Can someone explain how Greater Exports leads to Aggregate Demand to Increase?
Also what affect does imports have on Aggregate Demand (AD). Why does Reduced Imports and Rise in Exports mean AD increases (depreciation in currency)?
Doesn't Aggregate Demand mean, spending on goods on services so shouldnt imports rise Aggregate Demand since greater imports mean greater consumption?
A depreciation of £ means that £ is weaker and so exchange rates fall from a UK residents perspective. Therefore what may have been £1=$2 is now £1=$1.5. Therefore it is now cheaper for Americans to import goods from Uk than previously. In addition it is now more expensive for UK residents to import from USA. Therefore firms would redirect their production to America due to demand from America. Therefore we export more than we import. As a result net trade worsens and so the depreciation of the £ would cause a rise in AD.
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keynes24
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#13
(Original post by TheProKi)
So we don't need to know why, are you 100% sure?
So we don't need to know why, are you 100% sure?
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