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

1759 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

What is expansionary fiscal policy and what effect does it have?


Relate the competitive market and the monopoly setting


Using a graph, provide reasons for the placement of a sales tax on alcohol. (5 marks)


Is the demand for food likely to be Price elastic or Inelastic?


We're here to help

contact us iconContact usWhatsapp logoMessage us on Whatsapptelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

© MyTutorWeb Ltd 2013–2025

Terms & Conditions|Privacy Policy
Cookie Preferences