ATAR Notes: Forum

VCE Stuff => VCE Business Studies => VCE Subjects + Help => VCE Economics => Topic started by: hdxx on April 05, 2018, 01:33:19 pm

Title: Effect of AD factor on economic activity?
Post by: hdxx on April 05, 2018, 01:33:19 pm

How does a first home buyers grant from the gov affect economic activity?

Title: Re: Effect of AD factor on economic activity?
Post by: Chelsea f.c. on May 18, 2018, 09:19:31 pm

A first home buyers grant will lead to a shit in the ad curve to the right as house prices increase thus increasing inflation.

Title: Re: Effect of AD factor on economic activity?
Post by: DoctorTwo on May 19, 2018, 04:50:56 pm

A first home buyers grant will increase demand for houses, so the demand curve will shift to the right. This will lead to an increase in private consumption expenditure (C) and government expenditure (G) which will expand AD and subsequently strengthen economic activity.

Title: Re: Effect of AD factor on economic activity?
Post by: Chelsea f.c. on June 06, 2018, 05:46:33 pm

Just to clarify demand does not shift because of more demand a demand curve is a curve of different low and high demands... demand curves shift due to outside factors e.g. An unexpected change to the law that increases prices for each given level of GDP/demand/Y where a shift occurs because now prices are higher at any given demand level... remember difference between movement along the curve and shift or else you'll get yourself into a muddle come exams  :)