Aggregate Demand & Related Concepts
Description: Aggregate demand is the total demand for goods and services in an economy, comprising consumption, investment, government spending, and net exports (exports minus imports).
Description: In a two-sector model, aggregate demand (AD) is the sum of consumption (C) and investment (I), representing total spending by households and businesses.
Description: The consumption function represents the relationship between income and consumption, indicating the propensity to consume, or the fraction of income spent on goods and services.
Description: APC (Average Propensity to Consume) compares total consumption to income, while MPC (Marginal Propensity to Consume) measures the change in consumption due to income changes incrementally.
Description: The MPS (Marginal Propensity to Save) schedule and diagram illustrate the relationship between income changes and savings, showing how savings increase with income.
Description: The investment function analyzes how changes in interest rates and business expectations affect planned investment spending, influencing economic growth and employment levels.
Board: State Board
Stream: Commerce
Standard: XI
Course: Economics
Know More
Board: CBSE
Stream: Commerce
Standard: XII
Course: Economics
Know More
Board: CBSE
Stream: Commerce
Standard: XII
Course: Economics
Know More
.png)