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 barriers that LEDC's face when attempting to achieve stable, long-term growth
Why did productivity in the UK remained stagnant after 2007?
Explain the factors which might determine the natural rate of unemployment (15 marks)
What is the difference between an elastic good and an in-elastic good?