top of page

Overview



The total demand in the economy for goods and services is called the aggregate demand and it is made up of several components of the circular flow.

Aggregate demand (AD) consists of four components:

Consumption (C):

This is also known as consumer expenditure. It consists of spending by households on goods and services.

Investment (I):

This is spending by private sector firms on capital goods.

Government spending (G):

This covers government spending on goods and services.

Net exports (X–M):

This is the difference between the value of exports of goods and services and the value of imports of goods and services.

Thus

AD = C + I + G + X − M

< Back
Untitled design(5).png

Economics notes  on

The aggregate demand curve

Perfect for A level, GCSEs and O levels!

👑Subscribe to the Economics Study Pack and Download economics notes in PDF and EDITABLE versions!

Economics Study Pack
factors influencing demand.jpg
bottom of page