The determinants of aggregate demand (AD) refer to the key factors that cause shifts in the AD curve, which represents the total demand for goods and services in an economy at different price levels. AD is calculated as the sum of four main components: consumption (C), investment (I), government spending (G), and net exports (X – M).

Shifts in AD occur due to changes in these components, influenced by various economic factors:

• Consumption: Affected by disposable income, household wealth, interest rates, and consumer confidence.
• Investment: Influenced by interest rates, business confidence, expectations of future profitability, and technological advancements.
• Government spending: Determined by fiscal policy priorities, such as infrastructure or welfare programs.
• Net exports: Impacted by exchange rates, foreign income levels, and the economic performance of trading partners.

Other broader influences include tax policies, which affect disposable income and incentives to invest, and overall monetary policy through interest rate adjustments. Understanding these determinants of AD is essential for analyzing macroeconomic fluctuations and policy responses in A-level Economics.