Economics AS Macroeconomics Notes - StudyWise

1 Created by Economics AS Macroeconomics Notes Aggregate Demand The total demand for a country s goods and services at a given price level and in a given time period. Aggregate Demand Formula: AD = Aggregate Demand C = Consumption / Consumer Expenditure I = Investment G = Government Expenditure X = Exports M = Imports Exports Imports Net Trade Net Exports Consumption / Consumer Expenditure Spending by households on consumer products Consumption is the largest component of AD Investment Spending on capital goods Investment is the most volatile component of AD Government Expenditure Spending by the central government and local government on goods and services This is education, health care and the police service NOT including transfer payments (housing benefit, job seeker s allowance and state pensions) / an increase in job seeker s allowance would be reflected in consumption as the increase in benefits will create an increase in disposable income that would then be spent on goods and services.

Economics AS Macroeconomics Notes Aggregate Demand – The total demand for a country’s goods and services at a given price level and in a given time period. Aggregate Demand Formula: AD = Aggregate Demand C = Consumption / Consumer Expenditure I = Investment G = Government Expenditure X = Exports M = Imports AD = C + I + G + (X

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