Aggregate demand

5. A major driver; lower rates reduce borrowing costs, increasing consumption and investment.
7. An increase in asset prices (e.g., houses, stocks) makes individuals feel wealthier, leading to higher spending.
8. The total volume of goods and services produced in an economy that households, firms, the government, and foreigners are willing to buy at any given price level.
9. An increase in real GDP driven by a rise in AD.

1. Expenditure by firms on capital goods (machinery, factories) to increase production capacity.
2. Optimism about the future increases household spending and capital investment.
3. Total spending by households on goods and services; the largest component of AD (~60%).
4. Income remaining after taxes and social security charges, which determines consumption levels.
6. A depreciation of the currency makes exports cheaper and imports more expensive, generally increasing net exports (X-M).