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

1782 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

How can we use price elasticity of demand to determine the incidence of a tax on a good?


Assess the likely macroeconomic effects of an increase in house prices on the UK economy


explain the effect of a rise in government expenditure in the AD-AS framework


What is the effect on the UK current account balance following an appreciation of the Sterling?


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