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Question : The aggregate demand (AD) is given by AD = C + I + G + X - M. If consumption (C) is INR 3,500, investment (I) is INR 2,000, government spending (G) is INR 1,500, exports (X) are INR 800, and imports (M) are INR 600, what is the aggregate demand?

Option 1: INR 4,200

Option 2: INR 4,700

Option 3: INR 5,200

Option 4: INR 7,200


Team Careers360 25th Jan, 2024
Answer (1)
Team Careers360 26th Jan, 2024

Correct Answer: INR 7,200


Solution : The correct answer is  (D) INR 7200

To calculate the aggregate demand (AD), we can substitute the given values of consumption (C), investment (I), government spending (G), exports (X), and imports (M) into the aggregate demand equation.

Given: C = INR 3,500, I = INR 2,000, G = INR 1,500, X = INR 800, M = INR 600

Substituting these values into the aggregate demand equation, we get:

AD = C + I + G + X - M

AD = 3500 + 2000 + 1500 + 800 - 600

AD = 7200

Therefore, the aggregate demand is INR 7,200.

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