ILO:

a) Components of AD: C+I+G+(X-M)

b) The relative importance of the components of AD

c) The AD curve

d) The distinction between a movement along, and a shift of, the AD curve

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

AD = Total amount of expenditure by all economic agents within the economy over a given period of time.

The components of AD for the UK economy: household consumption (C) makes up approximately 65% of AD, government spending (G) accounts for approximately 25% of AD, investment (I) is around 15% of AD, and net exports (X-M) around -5% of AD.

Therefore a 1% increase in consumption would have a much greater effect on the UK economy than a 1% increase in any of the other components of AD.

Additional reading:
Tutor2u revision AD
ONS - retail sales
Explain why the size of the USA trade deficit is important for their economy?
US Largest Trade Deficit - with Top 10 Trading Partner Countries From 1985 To 2019 - US$ Million
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Sloping down:

1. Real balance effect; for example, an increase in the average price level reduces the purchasing power of households, businesses, government and the foreign
sector, so reducing the quantity of real output demanded.

(Real = takes account inflation. Impacts W&A)

2. At higher average prices = reduced IPC, an economy is less likely to export, more likely to import (decreasing the X component and increasing the M component of AD, and therefore decreasing AD overall).
(PL = average prices of G/S produced in an economy.)
3. A t higher average prices, the interest rate is likely to be higher, meaning that investment (a component of AD) is lower. Households and firms might also save more (increase MPS).

Further reading:

Investment and The Rate of Interest

Shifts in AD

Change in the average price level in an economy will cause a movement along the AD curve.

A change in the value of the components of AD will cause a shift of the curve.

Factors:
> Fiscal policy (direct tax - Y / corporation)
> Monetary policy (i rates, availability credit, ER)
> Confidence/Future expectations
> Changes in employment
> International events (Euro zone crisis)

Case study

Assess the us of furlough to protect growth during covid?
Coronavirus: How much is it costing and who will pay? - BBC Newsnight
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Assess the impact of China's policy reform on AD? (10)
China's 40 years of reform that turned it into a superpower | ABC News
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Revision videos

Y1/IB 18) Aggregate Demand - Shifts and the Downward Slope
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Aggregate Demand
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