Explain components of AD / National Income 

C: Consumption – what does consumption depend on?                                   

  1. Level of real disposable income
  2. MPC: Marginal Propensity to consume
  3. Availability of credit
  4. Rate of Interest
  5. Rate of taxation

I: Investment – what does investment depend on? 

  1. Rate of interest
  2. Business confidence / expectation

G: Government spending –

  1. Government spending on goods and services eg.

eg. paying teacher salary

  1. Decisions by politicians – eg. fiscal policy

X: Exports – what do exports depend on? 

  1. Income level in export markets
  2. Competitiveness of Irish Exports
  3. Value of Euro compared to other currencies

M: Imports – Determinants 

  1. Levels of income rise
  2. Value of Euro compared to other currencies
  3. The higher the MPM (Marginal propensity to import
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