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Question
Long Answer Type Questions:
What is meant by aggregate demand? Explain the various components of aggregate demand.
What is meant by aggregate demand? Explain the various components of aggregate demand.
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Solution
Aggregate Demand refers to the desired level of expenditure in the
economy during an accounting year. It is what people wish to spend on the
purchase of goods and services during an accounting year.
Aggregate
demand= C+I+G+ (X-M) where
C= Consumption expenditure
I= Investment
expenditure
G= Government expenditure
(X-M)= Net export
Aggregate Demand refers to the desired level of expenditure in the economy during an accounting year. It is what people wish to spend on the purchase of goods and services during an accounting year.
Aggregate demand= C+I+G+ (X-M) where
C= Consumption expenditure
I= Investment expenditure
G= Government expenditure
(X-M)= Net export
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