Aggregate demand is the total demand for final goods and services in an economy at a given overall price level and time period. An AD diagram plots aggregate demand (AD) on the y-axis against the price level on the x-axis, with the AD curve sloping downward to the right to show that as the price level increases, aggregate demand decreases. A movement along the AD curve represents a change in a component of AD like consumption, investment, or government spending that causes the overall level of spending to change but not the price level. The AD formula represents the components of aggregate demand as the sum of consumption (C), investment (I), government spending (G), and net exports (X-M). Economic growth would cause

1. ECON2
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Aggregate Demand
Answer all the questions below
1. Define Aggregate Demand
2. Draw an AD Diagram
3. Why does the AD curve slope from left to right?
4. What will cause a movement along the AD curve?
5. Explain the formula AD = C+ I + G + (X-M)
6. How would economic growth be shown on the AD curve