Using aggregate demand and aggregate supply analysis examine the different effects on the UK economy

a) Decisions by firms found in the UK to relocate overseas hoard contain is delineate as the total metre of demand/expenditures in the miserliness at any given wrong level. It is measured as AD = C + I + G + (X - M) The letters abbreviate the four major(ip) contributions of aggregate demand. Consumption (C ) is the expenditure by households on goods and run. coronation ( I ) is the disbursement by firms on investment goods. organization spending (G ) includes current spending in terms of fee and salaries, and investment in goods such as new roads and new schools. Exports minus imports (X - M ) shows the difference between what we deceive and what we buy from abroad. Aggregate grant is defined as the total amount of production of goods and service in an economy. If the decision by UK ground firms to move abroad were acted upon, this would in theory lead to a hang in aggregate demand. The AD curve would geological fault leftover to signify this. This is because there are now slight firms producing goods and services for the UK and so there is less choice in the market. As consumers now acquire less to buy, consumer spending, which is a component of aggregate demand, falls. Furthermore, investment is affected.

With the relocation there are less field of study firms to invest in, and therefore investment decreases. Another channelise would be that these firms may have perhaps exported their goods and services abroad to impertinent countries. After they move UK exports could see a decrease, core that, harmonise to the aggregate demand equation, the difference between exports and imports give be smaller. This factor too would co nclude in a decrease in AD. To illustrate th! e affect the transfer of UK based firms would have on... If you want to get a full essay, consecrate it on our website: OrderEssay.net

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