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Case Interview Prep

Category - Economics

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An aggregate demand curve is the sum of demand curves from different segments of the economy. Such a curve (Y_d) takes into account four different economic indicators as seen below. What does the “C” stand for?
Y_d = C + I + G + (X-M)

consumption
cost
competition
cycle

Explanation

Answer: A - The “C” stands for consumption.

Key Takeaway: Personal consumption expenditures are one of the components of the aggregate demand curve equation. This consumption by households and unattached individuals is a function of disposable income.

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