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Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364

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BuyFindarrow_forward

Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364
Textbook Problem

What are the components of the aggregate demand (AD) curve?

To determine

Components of AD curve are to be determined.

Explanation

Aggregate Demand is determined by consumption demand, investment demand, Government expenditure and foreign trade.

Aggregate Demand = Consumption Demand+ Investment Demand + Government Expenditure + Foreign Trade.

  AD=C+I+G+(XM)

AD = Aggregate Demand

C = Consumption Demand

I = Investment Demand

G = Government Expenditure

X = Exports

M = Imports

Consumption Demand: As for consumption demand, it depends upon the propensity to consume of the community and level of national income

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