(a) Define Aggregate Demand. What are its component?
(b) From tire following data about an economy, calculate its equilibrium level of income.
(i) Marginal Propensity to Consume = 0.75
(ii) Autonomous Consumption = 200
(iii) Investment = 6,000
(a) Aggregate Demand-It refers to the total value of final goods and services that all sector of the economy taken together are planning to buy at a given level of income during a ** of time.
Components are:
(i) Private Conpumption Expenditure (C)
(ii) Investment Expenditure (I)
(iii) Government expenditure (G)
(iv) Net exports (X - M)