Aggregate Demand- Macro Topic 3.1

Mr. Clifford introduces aggregate demand, explaining it as the total demand for all goods and services in an economy. He discusses the components of GDP that make up aggregate demand: consumer spending, investment, government spending, and net exports. The video explains the downward-sloping aggregate demand curve, influenced by the wealth and interest rate effects. It also covers factors that can shift the aggregate demand curve, such as changes in the stock market, government spending, consumer confidence, and international trade.

What does aggregate demand encompass?

• Only exports and imports

• The demand for all goods and services

• Only government spending

• Only consumer goods

Which of the following is NOT a component of GDP?

• Consumer spending

• Government spending

• Investment spending

• Net imports

Why does the aggregate demand curve slope downwards?

• Due to increasing opportunity costs

• Because of the law of diminishing returns

• Because of the wealth and interest rate effects

• Due to the substitution effect

What happens to aggregate demand if the stock market rises?

• It shifts to the left

• It increases

• It remains unchanged

• It decreases

How does a decrease in government spending on goods and services affect aggregate demand?

• It increases aggregate demand

• It shifts aggregate demand to the right

• It decreases aggregate demand

• It has no effect on aggregate demand