Hello , below is my post and last line is a question need an answer please.
Introduction
Aggregate demand is the sum of the whole amount of goods and services that are demanded in an economy at a specific overall price level, in a given period (Strauss, 2004). In other words, this concept is also known as total spending. It is often represented by an aggregate demand curve, which statistically outlines the relationship between the levels of price and the amount of output that business enterprises are willing to offer. Ideally, there is a negative correlation between aggregate demand and the price level. On the other hand, aggregate supply is the total supply of goods and services that are produced in an economy at a specific overall price level, and in a given period (Strauss, 2004). It is usually represented by the aggregate-supply curve, which exposes the relationship between levels of price and the amount of output that business enterprises are willing to offer. Basically, there is a positive correlation between the aggregate of supply and the level of prices. For instance, increasing prices are key signals for firms to expand their production in order to meet the rising level of aggregate demand. However, for purposes of this writing, emphasis will be laid on one aggregate and supply factor that would have the greatest impact on the economy of San Diego.
Demand and Supply Factor with the Greatest Impact on the Economy
According to the aggregate demand and supply model, the increase in the aggregate demand leads to the aggregate supply curve moving up thus resulting to higher price levels. Aggregate demand and supply factors include; Consumption, Investment, Government Spending, Exports, and Imports. Critically, the aggregate demand and supply factor that would have the greatest impact on the economy of San Diego is Consumers expenditure on goods and services, which is also referred to as Consumption.
Rationale
The consumer’s expenditure on goods and services include the demand for durables like vehicles and audio-visual equipments, as well as non-durable goods like foods and drinks. These products are consumed, and for that case they must be re-purchased from time to time, which makes their contribution to the national economy to be significant enough. Consequently, there are five main determinants that will definitely shift the consumption schedule of San Diego City, which are household wealth, the real rate of interest, house hold expectations, taxes and household debt. Based upon the aforementioned determinants, it is apparent that consumption as an aggregate demand and supply factor will account for over 70% spending in the economy of San Diego.
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