Understanding Aggregate Demand

What does Aggregate Demand represent in an economy?

• The demand for a single product

• The total demand for all goods and services

• The demand for imported goods only

• The supply of goods and services

Which of the following is NOT a component of Aggregate Demand?

• Savings

• Government spending

• Investment spending

• Consumer spending

What happens to consumer purchasing power when the price level decreases?

• It decreases

• It becomes unpredictable

• It increases

• It remains the same

How does an increase in interest rates affect consumption and investment?

• Consumption decreases, investment increases

• Both decrease

• Both increase

• Consumption increases, investment decreases

What effect does a decrease in government spending on goods and services have on Aggregate Demand?

• It decreases Aggregate Demand

• It has no effect on Aggregate Demand

• It increases Aggregate Demand

• It only affects consumer spending