Unit 3 February 16

• Determinants of AD
• Consumption (c)
• Gross private Investment (Ig)
• Government Spending (G)
• Net exports (Xn) = Exports - Imports (X-M)
• Change in consumer spending 
• Consumer wealth (Boom in stock market)
• Consumer Expectations (people fear a recession)
• Household indebtedness ( more consumer debt)
• Taxes (decrease in income taxes)
• Change in investment spending 
• Real interests rates (price borrowing money)
• Future Businesses expectations ( high expectations )
• Productivity and technology (new robots )
• Business taxes 
• Change in Government spending
• war 
• Nationalized health care
• Decrease in defense spending 
• Change in net exports (X-M)
• Exchange rates
• if U.S. dollar depreciates relative to the euro
• National Income compared to abroad 
• if a major importer has a recession 
• if the U.S. has a recession
• AD = GDP = C + Ig + G + Xn
• Government Spending 
• more government spending ( AD Shifts right )
• Less government spending  ( AD shifts left )