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
Answered by James T. Economics tutor

2192 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

Discuss two ways in which a country's international competitiveness could increase (8)


Should the government intervene in cases of market failure


Explain, using a diagram, how a firm might use third degree price discrimination to increase their profits.


Explain the potential impacts on the global economy of sustained trade imbalances (25 marks)


We're here to help

contact us iconContact ustelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

MyTutor is part of the IXL family of brands:

© 2026 by IXL Learning