<h2>Key Concepts and Summary</h2>
<p>Aggregate demand is the sum of four components: consumption, investment, government spending, and net exports. Consumption will change for a number of reasons, including movements in income, taxes, expectations about future income, and changes in wealth levels. Investment will change in response to its expected profitability, which in turn is shaped by expectations about future economic growth, the creation of new technologies, the price of key inputs, and tax incentives for investment. Investment will also change when interest rates rise or fall. Government spending and taxes are determined by political considerations. Exports and imports change according to relative growth rates and prices between two economies.</p>
<h2>Glossary</h2>
<h3>disposable income</h3>
<p>income after taxes</p>
<h3>inflationary gap</h3>
<p>equilibrium at a level of output above potential GDP</p>
<h3>real GDP</h3>
<p>the amount of goods and services actually being sold in a nation</p>
<h3>recessionary gap</h3>
<p>equilibrium at a level of output below potential GDP</p>

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Key Concepts and Summary

Economics studies social behavior guiding the allocation of scarce resources to meet the unlimited needs and desires of the individual members of a given society, and for the production of goods and services, growth of production and welfare over time, and a great variety of other complex issues of vital concern to society. 

Economics

Discover the Keynesian perspective on macroeconomics, including concepts such as aggregate demand, consumption and investment expenditure, government spending, net exports, wage and price stickiness, and the Phillips Curve.


Key Concepts and Summary

Key Concepts and Summary

Glossary

disposable income

inflationary gap

real GDP

recessionary gap

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