Aggregate demand has 4 basic components:
1 Consumption (C): Spending by households on goods and services.
2 Investment (I): Spending by fi rms on investment goods both fixed capital and increases in stocks
3 Government spending (G): This includes current spending such as wages and office supplies. It also includes spending by the government on investment goods such as new schools and hospitals. It does not
include transfer payments such as welfare payments
4 Exports minus imports (X-M): This is foreign spending on UK produced goods and services (X) less UK spending on foreign produced goods and services (M).
lydiajane74 answered the question on July 4, 2018 at 08:09
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