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

2180 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

Analyse positive impacts of a merger between two firms.


Company A has demand function q=2p+5, and supply function q=10p. What is equilibrium price and quantity


Describe the effects of an indirect tax (ex. sales tax) on the market for cigarettes.


To what extent is monetary policy effective in controlling the rate of inflation?


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