The value of final goods and services which all the sectors in an economy are planning to buy in a year is called the aggregate demand.
It has 4 components, namely:
a)Private final consumption expenditure
b) Government final consumption expenditure
c) Investment expenditure
d) Net exports
Controlling the money is helpful to reduce the excess demand in the following ways:
● With the reduction in money supply, the amount of money left with people to make purchases of goods and services will reduce.
● This will reduce aggregate demand.
● Thus, the excess demand would be wiped out.
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