3 questions on "shifts of the aggregate demand curve - changes in wealth"

Consumer spending depends on what two factors?
Consumer spending depends in part on the value of household assets
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How does the size of Existing stock of physical capital  affect planned investment?
  • Firms engage in planned investment to add to their stck of physical capital
  • theri incentives to spend increases
  • the more they have the less they will feel the need to add more
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How does wealth affect consumer spending? Give 1 example
  • When the real value of assets rises,
  • the purchasing power the rises,
  • their incentive to spend increases
  • they consume more 
  • for example significant rise in the stock market the increases aggregate demand
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