Aggregate demand
What Aggregate demand means in Economics A-Level, as defined for AQA.
Definitions of Aggregate demand
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Reference: AQA
A fall in the price level increases the real purchasing power of wealth, lowers interest rates, and makes domestic exports more competitive, resulting in an extension along the curve.
A rightward shift in this closes a negative output gap along an upward-sloping short-run aggregate supply curve, illustrating short-run growth.
The total planned expenditure on goods and services produced in an economy at a given price level, calculated as AD = C + I + G + (X - M).
Falls when consumers delay purchases expecting lower future prices, leading firms to cut investment, lower wages and shed labour.
The total planned expenditure in an economy, calculated as consumption plus investment plus government spending plus net exports.
Total demand that falls when higher borrowing costs reduce consumption and investment, easing upward pressure on the price level.
Topics that use Aggregate demand
- Aggregate demand and aggregate supply analysis (AQA A-Level)
- Aggregate demand and the level of economic activity (AQA A-Level)
- Central banks and monetary policy (AQA A-Level)
- Economic growth and the economic cycle (AQA A-Level)
- Inflation and deflation (AQA A-Level)
- The determinants of aggregate demand (AQA A-Level)
Related terms
- Inflation
- Macroeconomic performance
- Aggregate supply
- Circular flow of income
- Exchange rates
- Interest rates
- Macroeconomic objectives
- Negative output gap
Using Aggregate demand in the exam
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