AD and AS

In the circular flow of income, AS=AD,and so:
Y=C+I+G+(X-M)
The components of aggregate demand are consumption expenditure,investment,government spending and exports.

CONSUMER EXPENDITURE:
* Real disposable income.
* Wealth.
* Consumer confidence and expectations.
* The rate of interest.
* The age structure of the population.
* Inflation.

INVESTMENT
* Changes in real dasposable income.
* Expectations.
* Capacity utilisation.
* Current profit levels.
* Corporation tax.
* The rate of interest.
* Advances in technology.
* Price of capital equipment.

GOVERNMENT SPENDING
*The government's view on the extent of market failure and its ability to correct it.
*The level of economic activity in the economy can influence government spending.
*A desire to please the electorate.
*War,terrorist attacks and rising crime,or their threat,can also increase government spending.