Aggregate Demand (AD) = C + I + G + (X – M)
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प्रश्न
What are the determinants of Aggregate demand?
सविस्तर उत्तर
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उत्तर
Aggregate demand refers to the total demand for all goods and services in an economy at a given overall price level and in a given period of time. The main determinants are:
- Consumer Spending (C): The total expenditure by households on goods and services. It depends on factors such as disposable income, savings, taxation, interest rates, and consumer confidence.
- Investment Spending (I): The expenditure by businesses on capital goods like machinery, buildings, and technology. It is influenced by interest rates, business expectations, and the availability of credit.
- Government Expenditure (G): Spending by the government on public goods and services like education, defence, and infrastructure. It directly increases aggregate demand.
- Net Exports (X–M): The difference between exports and imports. When exports exceed imports, aggregate demand rises, and when imports exceed exports, it falls.
- Monetary and Fiscal Policies: Expansionary monetary or fiscal policies (like lowering taxes or increasing the money supply) tend to increase aggregate demand, while contractionary policies decrease it.
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संबंधित प्रश्न
State the determinants of aggregate demand.
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Aggregate demand depand only on the consumption expenture.
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Depreciation
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Income earned from foreign investment is considered for aggregate demand.
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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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The equality between aggregate demand and aggregate supply determines the equilibrium level of employment.
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Aggregate Supply
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Aggregate demand is a positive function of the level of employment and output.
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Aggregate supply is influenced by the state of technology only.
Answer in detail.
Explain the determinants of aggregate demand.
Answer in detail.
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