Bringing the aggregate demand equation to life

The aggregate demand equation comes up a lot in economics classrooms. After all, it gives economists a clear and simple way to understand an economy: Aggregate Demand = Consumption + Investment + Government Spending + The difference between imports and exports (also known as Net Exports).

But the aggregate demand equation represents much more. It is an excellent example of how classroom content is applied in the real world: every day, Reserve Bank of Australia (RBA) economists use the equation to better understand developments in the Australian and global economies.

In this video, RBA staff explain each component of the equation, talk about their day-to-day work as economists and showcase the opportunities of a career in economics.

00:00 Introduction to the aggregate demand equation
00:28 Consumption
1:38 Investment
2:47 Government spending
4:08 Net exports (exports – imports)
5:41 Summing up the importance of the aggregate demand equation

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