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One way to derive aggregate demand is by looking at its four component parts,which are
Well-functioning Market
A market where resources are allocated efficiently, information is freely available, transaction costs are low, and property rights are protected.
Nominal Interest Rate
The percentage increase in money that borrowers pay lenders, not adjusted for inflation.
Inflation
The pace at which prices for various goods and services climb, diminishing the value of money to buy them.
Storage Costs
Expenses associated with keeping goods stored in a warehouse or other facility until they are sold or used.
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