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graph and explain the demand curve in macroeconomics

graph and explain the demand curve in macroeconomics
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Answer #1

The demand curve in macroeconomics is called the Aggregate Demand. The shape of the demand curve is downward sloping as shown in figure below as it shows a negative relationship between the price level and Real GDP.

AD = C + I + G + NX

where C = Consumption spending

I = investment spending

G = government spending

NX = Net Exports

Any change in C, I, G or NX will affect the AD. Increase in consumption expenditure will shift the AD curve to the right and vice-versa.

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