## What is Aggregate Demand?

Aggregate Demand is planned expenditure of all sectors at Particular Income Level

## Formula of AD

We have already studied that

Aggregate Demand = Private Consumption Exp + Investment Expenditure

AD = C + I

## Schedule of Aggregate Demand

It can be made by totaling Consumption and Investment Expenditure

## Important Points About AD

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1. Even at 0 level of Income, there is AD
**

due to Autonomous Consumption and Autonomous Investment Expenditure which are applicable at 0 level of income

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2. AD increases with Income
**

With the increase in income, Consumption Investment increases but investment expenditure remains the same

Due to this increase in consumption expenditure, AD increases with income

**
3. Note all 3 curves do not start from Origin
**

Consumption Curve starts from Point S (OS Representing Autonomous Consumption Expenditure)

Investment Curve starts from Point R (OR Represents Autonomous Investment Expenditure)

AD Curve starts from Point T (OT Represents total of Autonomous Consumption and Investment Expenditure)

OT = OR + OS

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4. Consumption Curve C is Positively Sloping
**

Increases with Increase in Income

Investment Expenditure is a horizontal line parallel to x axis

It Remains Fixed irrespective of increase in income

Aggregate Demand is combination of Consumption and Investment Curve so it is also positively sloping

### NCERT Questions

**
No questions in this part
**

### Other Books

#### Question 1

State some important points about Aggregate Demand.

View Answer

**
1. Note all 3 curves do not start from Origin
**

Consumption Curve starts from Point S (OS Representing Autonomous Consumption Expenditure)

Investment Curve starts from Point R (OR Represents Autonomous Investment Expenditure)

AD Curve starts from Point T (OT Represents total of Autonomous Consumption and Investment Expenditure)

OT = OR + OS

**
2. Consumption Curve C is Positively Sloping
**

Increases with Increase in Income

Investment Expenditure is a horizontal line parallel to x axis

It Remains Fixed irrespective of increase in income

Aggregate Demand is combination of Consumption and Investment Curve so it is also positively sloping

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