Chapter 23: The Characteristics of Aggregate Demand

1. Define 'aggregate demand' 

The total of all demands or expenditures in the economy at any given price. 

1. Why are imports taken away from national expenditure? 

They are taken away because imported goods do not form part of the national output. 

1. What are the different components of expenditure? 

Consumption 

Investment 

Government spending 

Exports and imports 

1. What does the 'aggregate demand curve' show? 

It shows the relationship between the price level and equilibrium national income. 

1. What is the relationship between price level and equilibrium national income? 

The relationship is negative as when price levels rise, the…