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
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