Answered: what is the importance of aggregate…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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what is the importance of aggregate demand?

Expert Solution

Introduction:

Aggregate Demand refer to the sum total of income that the seller or producer expect from the sales of the commodity in the market at a given price during a particular period of time.

It includes all the consumer goods, producer's goods, capital goods etc.

The components of an Aggregate Demand are ,

Consumption expenditure, investment expenditure, government expenditure and net exports.

Calculated as:

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

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