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Using aggregate demand and aggregate supply analysis examine the different effects on the UK economy
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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