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प्रश्न
Answer the following question:
What are the determinants of Aggregate Demand (AD)?
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उत्तर
Aggregate demand implies the total demand of final goods and services by all the people in an economy. 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).
Algebraically,
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. Consumption expenditure can be further divided in two categories as - Autonomous consumption expenditure and Induced consumption expenditure. Autonomous consumption expenditure is independent of the levels of disposable income whereas, induced consumption expenditure varies directly with the level 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 varies inversely with the rate 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
What is aggregate supply?
Explain national income equilibrium through aggregate demand and aggregate supply. Use diagram. Also explain the changes that take place in an economy when the economy is not in equilibrium
Explain the concept of ‘deficient demand’ in macroeconomics.
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Explain the concept of deflationary gap.
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explain the role of Bank Rate in correcting deficient demand?
Explain the role of 'Open Market Operations' in reducing Deflationary Gap
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Explain the determinants of aggregate supply.
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Aggregate demand depand only on the consumption expenture.
Explain the following concepts or give definitions.
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Income earned from foreign investment is considered for aggregate demand.
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Fill in the blank with appropriate alternatives given below
That part of income, which is not spent on consumption, is called __________.
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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 | ||
State whether the following statement is true or false.
The equality between aggregate demand and aggregate supply determines the equilibrium level of employment.
Define or Explain the following concept:
Aggregate Supply
Give reason or explain.
Aggregate demand is a positive function of the level of employment and output.
Write Short note on:
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State with reason whether you agree or disagree with the following statement.
Aggregate demand depends only on the consumption expenditure.
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Answer in detail.
Explain the determinants of aggregate demand.
Answer in detail.
Explain the equilibrium between Aggregate Demand and Aggregate Supply.
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Discuss the adjustment mechanism in the following situation :
Aggregate demand is lesser than Aggregate Supply.
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In a closed economy, aggregate demand is the sum of ______.
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Explain its impact on the level of output, income and employment.
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With reference to Simple Keynesian model, give the meaning of ex-ante demand.
With the help of a diagram, determine the equilibrium level of output and income by using Aggregate demand and aggregate supply approach.
