Aggregate Demand and its Components (1 Viewer)

[dat202hoe]

Can somebody explain what this means?

 

[bling05]

Aggregate Demand = Consumption + Investment + Net Government Expenditure + (Exports - Imports)

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

Each of those are a component of aggregate demand.

 

[dat202hoe]

Thank you so much.

 

[midifile]

Just to be clear, aggregate demand can also be writted as C + I + (G - T) + (X - M), where T is taxation. If you are using the formula without the T then G is net government expediture (which is G - T anyway)