Aggregate Demand in Economics
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Questions and Answers

What are the components that make up the aggregate demand?

  • Producer spending, government subsidies, consumer savings, and net imports
  • Corporate investments, household consumption, foreign investments, and trade deficit
  • Consumer spending, investment, corporate and government expenditure, and net exports (correct)
  • Government spending, international aid, household income, and trade surplus
  • What does aggregate demand (AD) represent in economics?

  • The demand for intermediate goods and services in an economy
  • The total demand for final goods and services in an economy at a given time (correct)
  • The demand for imports and exports in an economy
  • The total supply of goods and services in an economy
  • How is the aggregate demand curve plotted?

  • With price level on the horizontal axis and real output on the vertical axis
  • With consumer spending on the horizontal axis and investment on the vertical axis
  • With real output on the horizontal axis and the price level on the vertical axis (correct)
  • With government expenditure on the horizontal axis and net exports on the vertical axis
  • What does the Pigou effect state in relation to aggregate demand?

    <p>A higher price level implies lower real wealth and therefore lower consumption spending</p> Signup and view all the answers

    According to macroeconomic assumptions, how is the downward sloping aggregate demand curve derived?

    <p>$Pigou's$ wealth effect, $Keynes'$ interest rate effect, and the $Mundell–Fleming$ exchange-rate effect</p> Signup and view all the answers

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