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 ▸

Explain the main reasons for government spending


What are the characteristics of a monopolistic market?


How can the concept of opportunity cost be explained on different aspects of the economy?


Evaluation points for macroeconomics (Unit 2)