What effects aggregate demand and how would it effect the price level of the economy?

Aggregate demand is the total demand in the economy. It is calculated as C+I+G+(X-M), where C is consumption, I is investment, G is government spending, X is exports and M is imports. The value of all is calculated to determine the total aggregate demand in the economy. If there is a rise in Consumption then aggregate demand will increase and shift outwards, causing a rise in the price level and increase in real GDP.

JT
Answered by James T. Economics tutor

2109 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

What two policies can the government employ to influence economic growth and inflation?


How can a PPF curve be used to show opportunity cost?


What are the main causes of globalisation? (8)


Using a diagram and an example, explain what a negative externality is and why it leads to market failure.


We're here to help

contact us iconContact ustelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

MyTutor is part of the IXL family of brands:

© 2026 by IXL Learning