AD Continued....

Consumption

Household spending in affected by:

-consumer wealth

   more wealth = more spending ( AD SHIFTS --->)

   less wealth = less spending ( AD SHIFTS <---)

-consumer expectation

   positive expectation = more spending (--->)

   negative expectation = less spending (<---)

-Household indebtness 

   less debt = more spending

   more debt = less spending 

-Taxes 

   less taxes

   more taxes

Gross Private Investment 

Investment spending in sensitive to:
-real estate rate

  -lower real investment rate: more investment >

  -higher real investment rate: less Investment <

 -expected returns 

  -higher expected returns >

  -lower expected returns <

   Expected returns are influenced by 

-expectations of the future profitability

-Technology

-Degree or Excess

Government spending:

-more gov't spending >

-less gov't spending <

Net Exports

Net exports are sensitive to 

-exchange rates and international value of $$

  -strong $ = ore imports and fewer exports = (AD >)
  -weak $ = fewer imports and more exports (AD <) 

-Relative Income  

  -strong foreign economy= more exports >

  -weak foreign economy = less exports <