Using aggregate demand and aggregate supply analysis examine the different effects on the UK economy
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a) Decisions by firms based in the UK to relocate abroad
Aggregate demand is defined as the total amount of demand/expenditures in the economy at any given price level. It is measured as
AD = C + I + G + (X - M)
The letters abbreviate the four major components of aggregate demand. Consumption (C ) is the spending by households on goods and services. Investment ( I ) is the spending by firms on investment goods. Government spending (G ) includes current spending in terms of wages and salaries, and investment in goods such as new roads and new schools. Exports minus imports (X - M ) sho…
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