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A-Level Economics · AD/AS equilibrium diagram question

AD is total demand in the economy. Which expression gives its components?

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The answer

C + I + G + X − M. Consumption + investment + government spending + net exports. Low demand can come from ANY of those four falling. AD = C + I + G + X − M. In COVID, lockdown lowered C and probably I while G rose to compensate — the government spent a lot more on furlough. Know the four components and you can always find which one a question is really about.

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This is one of 6 questions on the ad/as equilibrium diagram — every corner lettered, every wrong answer diagnosed.

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