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Name the principal component of AD …

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Name the principal component of AD in an open economy
  • 1 answers

Gaurav Seth 5 years, 4 months ago

Aggregate demand is the sum of four components: consumption, investment, government spending, and net exports.

Aggregate demand (AD) = total spending on goods and services

The formula for calculating aggregate demand is as follows:

AD = C + I + G + ( X-M ) 

 

  • C = Personal Consumption Expenditures.
  • I = Gross Private Domestic Investment.
  • G = Government Consumption Expenditures.
  • (X-M) = Net Exports of Goods and Services.
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