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Aggregate demand (AD) is the total quantity of goods and services demanded at different price levels. AD = C + I + G + (X - M). The AD curve slopes downward because of the wealth effect, interest rate effect, and foreign trade effect.
Ultimate Flashcard Review
Video
Aggregate Demand
Key Concepts to Understand
Question 1 of 4
When the domestic price level in a country falls, its goods become cheaper for foreigners to buy. This leads to an increase in what component of aggregate demand?
Consumption
Investment
Government Spending
Net Exports
Practice Questions: Test Your Understanding
Apply what you've learned with these practice questions. These questions test your understanding of the key concepts.
Question 1 of 3
Which of the following events would most likely cause the aggregate demand curve to shift to the right?
A decrease in household wealth
An increase in interest rates
An increase in expected future inflation
A decrease in government transfer payments
An appreciation of the domestic currency
Key Takeaways
- 📊Master the fundamentals: Understanding these core concepts is essential for success in AP Economics.
- ✅Practice makes perfect: Use the interactive exercises and practice questions to reinforce your understanding.