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
Related Economics A Level answers
All answers ▸Define price elasticity of demand and explain the factors affecting it
Explain why the use of petrol and diesel cars may be a source of market failure.
Consider Donald Trump chooses to raise import tariffs on Chinese Goods, what will be the impact on the US macroeconomic environment?
State and explain all of the factors which can shift the demand curve of a product