Understanding Aggregate Demand - Student Worksheet

1. Define Aggregate Demand in your own words:

2. The Formula for Aggregate Demand

AD = C + I + G + (X - M)

🛒 C = Consumption

Give an example of household spending:

🏭 I = Investment

Give an example of business investment:

🏛️ G = Government Spending

Give an example of government spending:

🚢 X - M = Net Exports

List one NZ export and one import:

For each scenario, circle whether it would increase or decrease AD:

The government builds new hospitals nationwide

Effect on AD: Increase Decrease

Component affected: _____________

NZ dairy exports to China drop by 30%

Effect on AD: Increase Decrease

Component affected: _____________

Households increase spending on home renovations

Effect on AD: Increase Decrease

Component affected: _____________

Which component of AD do you think has the biggest impact on NZ's economy currently? Explain why: