Edexcel A Level Economics B
Edexcel A Level Economics B 2.5 Aggregate Demand Exam Questions
Free Edexcel A Level Economics B exam questions on 2.5 Aggregate Demand, with mark schemes. Covers the components of AD and the factors that shift it.
2.5 Aggregate Demand exam questions
1 question pack of real past exam questions with its mark scheme. Answer every question without notes, then mark your answers line by line against the mark scheme.
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A Level Economics Flashcards
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About Edexcel A Level Economics B 2.5 Aggregate Demand
This part of 2.5 covers what drives total spending in the economy. Questions ask you to analyse the effect of a change in confidence, interest rates or the exchange rate on AD.
What you need to know
- Components AD = C + I + G + (X - M).
- Consumption and investment Affected by interest rates, confidence, wealth, credit availability and expected demand.
- Government spending and net trade Fiscal choices, exchange rates and incomes abroad.
- AD/AS analysis A shift in AD changes the price level and real output.
Common mistakes in 2.5 Aggregate Demand
- Shifting AD for a change in the price level.
- Forgetting imports are subtracted.
- Not completing the chain of analysis to the price level and output.
Try three 2.5 Aggregate Demand exam-style questions
1. State the formula for aggregate demand. (1 mark)
Show the mark scheme answer
AD = C + I + G + (X - M).
2. Explain how a fall in consumer confidence affects AD. (3 marks)
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Households expect lower incomes or job losses (1), so they save more and spend less (1), reducing consumption and shifting AD left (1).
3. Explain how a rise in exports affects real output. (2 marks)
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Exports are an injection that increases AD (1), so real output rises, especially if there is spare capacity (1).
2.5 Aggregate Demand FAQs
What does 2.5 Aggregate Demand cover?
The components of AD and the factors that change each one.
What is the largest component of UK AD?
Consumption, at around 60 percent.
How does AD link to AS?
Shifts in AD move along the AS curve, changing the price level and real output.
Revise this topic with flashcards: A Level Economics Flashcards, with mark scheme answers for Anki and Quizlet.
