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The components of Aggregate Demand are: Consumption, Investment, Government Spending and Net Exports. A cut in the base rate would mean that Aggregate Demand will increase, shifting outwards. A reduction ...
We define a perfectly competitive market as a market which fulfils the six following conditions: 1) Large number of sellers and buyers. 2) Homogenous product: All of the goods sold within the market are i...
There are two phases of business cycles: first, when the economy is expanding faster than the trend rate of growth, and second, when the economy is expanding slower than the trend rate of growth. Wh...
A devaluation is where a currency looses value compared to other currencies. For example the pound fell nearly 20% after the Brexit vote.Firstly, the devaluation will cause the price of imports to rise an...
AD=C+I+G+X-M1) Increased cost of borrowing-ConsumptionVariable rate mortgages will now have higher monthly interestrepayments. This leads to a decrease in disposable income for consumers.Consumers ...
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