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प्रश्न
Answer in detail.
Explain the determinants of aggregate demand.
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उत्तर
Aggregate demand is the summation of consumption expenditure (C), investment expenditure (I), government expenditure (G) and net earnings from foreign transactions (X – M).
where, X is exports and M is imports
AD = C + I + G + (X – M)
i. Consumption expenditure (C): Consumption expenditure refers to the total expenditure incurred by all the households in an economy on different types of final goods and services in order to satisfy their wants. There are two types of consumption expenditure - Autonomous consumption expenditure and Induced consumption expenditure. Autonomous consumption expenditure is independent of the levels of disposable income whereas, induced consumption expenditure depends on the levels of disposable income.
ii. Investment expenditure (I): Private investment expenditure refers to the planned (ex-ante) total expenditure incurred by all the private investors on creation of capital goods such as expenditure incurred on new machinery, tools, buildings, raw materials etc. Broadly, investment can be categorised into two types- Autonomous investment expenditure and Induced investment expenditure. The autonomous investment expenditure is independent of the rates of interest and levels of income whereas, the induced investment expenditure depends varies inversely with the rates of interest and directly with the levels of income.
iii. Government expenditure (G): Government expenditure refers to the total planned expenditure incurred by the government on consumption and investment purposes to enhance the welfare of the society and to achieve higher economic growth rates. The government expenditure comprises of both investment expenditure as well as consumption expenditure.
iv. Net exports (X – M): Net exports of a country refers to the difference between the demand for domestically produced goods and services by the rest of the world (exports) and the demand for goods and services produced abroad by the residents of that country.
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संबंधित प्रश्न
State the determinants of aggregate demand.
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explain the role of Bank Rate in correcting deficient demand?
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Write explanatory answer:
What is Aggregate demand ? Explain the determinants of Aggregate demand.
State whether the following statements are True or False with reason:
Income earned from foreign investment is considered for aggregate demand.
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Fill in the blank with appropriate alternatives given below
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| Group A | Group B | ||
| 1) | Aggregate Supply | a) | Expected receipts |
| 2) | Autonomous Investment | b) | Lord J. M. Keynes |
| 3) | Consumption | c) | Government Investment |
| 4) | A.P.C. | d) | ΔC/ΔY |
| 5) | Investment | e) | C/Y |
| f) | Addition to stock of capital | ||
| g) | Destruction of utility | ||
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Aggregate demand is a positive function of the level of employment and output.
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Aggregate Demand and Aggregate Supply
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What are the determinants of Aggregate Demand (AD)?
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Positive net earnings from foreign transactions add to aggregate demand.
Answer in detail.
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Identify the correctly matched pair from Column A to Column B:
| Column A | Column B |
| (1) Y = AD | (a) Level of output at full employment |
| (2) Forward Multiplier | (b) Withdrawal of investment decreases income |
| (3) Paradox of Thrift | (c) People save less or same as before |
| (4) Multiplier (k) < 1 | (d) 0 < MPC < 1 |
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