Practice question
Question
Directions For Questions
Read the given passage and answer the questions :
In the field of macroeconomics, the equilibrium output in an economy is determined by the interaction between aggregate demand (AD) and aggregate supply (AS). Aggregate demand refers to the total demand for final goods and services in the economy at a given price level, and it consists of consumption, investment, and government spending. The aggregate supply represents the total amount of goods and services that producers in an economy are willing and able to supply at different price levels. At the equilibrium point, aggregate demand equals aggregate supply, and there is no tendency for output to change unless affected by external factors like government policies or changes in consumer spending.
What factors influence aggregate demand in an economy?
Explanation
Consumption, investment, and government spending income determination correct; AD equals AS, multiplier MPS concept.
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