2.2 Aggregate Demand (Macro)

What is Aggregate Supply (AS)?

It is the total amount of goods and services produced in an economy.

What is the formula for (AD)?

AD = C + I + G + (X - M)

What is (AD)?

Total Demand

What does C + I + G + ( X - M) stand for?

• C = Consumptions

• I = Investments

• G = Government Spending

• X = Exports

• -M = Imports

What is Consumption?

Consumption is spending by households on goods and services in an economy at a given time period.

What are Investments?

Investments are the spending on capital goods (machinery and equipment) in an economy over a given time period. (Laptops, Phones) , etc.

What is Government Spending?

Is spending by the public sector on good services, such as education, health care, and defence.

What is Export?

Export is a process by which goods or services produced in one country are shipped to another country.

What is Import?

An import is a good or service brought into one country from another.

What is Disposable income?

Income after tax.

What is Aggregate Demand (AD)?

The total demand for goods and services produced within the economy over a period of time with the components of Consumption, Investments, Government Spending and net trade.