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Pearson Edexcel IAL Economics 2.3.2 Aggregate demand (AD) Question Bank

Practise calculating AD components, interpreting AD shifts and linking consumption, saving, investment and net exports to demand changes.

Syllabus
First assessment 2019
Course
Economics YEC11
Level
AS

Exam points

  • calculate missing AD components from C, I, G, exports and imports in a data table
  • use AD diagrams to show shifts caused by changes in net exports or confidence
  • explain how interest rates, saving behaviour or credit availability affect AD

Covered syllabus points

2.3.2.1a - concept of AD. characteristics2.3.2.1b - Components of aggregate demand: of AD • C + I + G + (X-M) = • the AD curve2.3.2.1c - distinction between a movement along, and a shift of, the AD curve2.3.2.2a - Influences on consumption: • disposable income • interest rates • consumer confidence •2.3.2.2b - relationship between savings and consumption2.3.2.2c - definition of the 'savings ratio'2.3.2.2d - Causes and effects of changes in the savings ratio2.3.2.3a - distinction between gross investment and net investment2.3.2.3b - Influences on investment: • the rate of economic growth • interest rates • business2.3.2.3c - Government policy to promote investment: • tax relief • subsidies • reductions on the2.3.2.4a - Influences on government expenditure: expenditure (G) • fiscal policy • the level of2.3.2.5a - impact on the net trade balance of changes in: (X-M) • real income • the exchange rate

2.3.2 - Aggregate demand (AD) question 1

[Maximum number: 4]

The table shows selected macroeconomic data for an economy in 2022.

Table for Question 2.3.2 - Aggregate demand (AD) question 1 — Edexcel A-Level Economics AS

Ceteris paribus, calculate the value of aggregate demand for this economy in 2022. Show your workings.

2.3.2 - Aggregate demand (AD) question 2

[Maximum number: 1]

The diagram shows aggregate supply and aggregate demand for an economy. Which one was the most likely cause of the change from AD to AD1?

A

A decrease in government spending

B

An increase in interest rates

C

A decrease in net exports

D

An increase in consumption

2.3.2 - Aggregate demand (AD) question 3

[Maximum number: 4]

In the first quarter of 2019 average house prices decreased by 15% in real terms in Sydney, Australia.

Explain one possible impact of this change in house prices on the level of consumption.

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