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 ▸

What is an inferior good


How does an increase in the interest rate affect the level of investment?


Using a diagram, explain how an economy's exchange rate is determined. 4 marks. AS Level The National and International Economy


What is the affect of expansionary fiscal policy on the economy?