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

2247 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

What is price elasticity of demand and how is it measured?


Evaluate the case for the introduction of subsidies for agricultural produce. (15 marks)


"What are the causes of an appreciation (outward shift of demand) for a floating exchange rate?"


Explain how monetary policy can be used to prevent business cycles


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