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 ▸

Comment on whether higher government spending will always increase inflation (6)


What are the causes of unemployment?


Explain how a decrease in interest rates affects real GDP and inflation. When may a decrease in the interest rate not affect real GDP?


I have revised all the content for Economics but my essays are not reaching the top level, what can I do to ensure I get the highest marks?