Aggregate Demand (AD)
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4 Terms
1
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Define aggregate demand.
Total spending on final goods/services: AD = C + I + G1 + G2 + (X – M).
2
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Why is AD important?
Drives short-term economic growth by stimulating production, jobs, and living standards.
3
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Name one factor affecting each AD component.
C → disposable income; I → business confidence; G → budget decisions; (X – M) → exchange rate, overseas growth.
4
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