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The component of aggregate demand (AD) that is not part of it is wages.
Let's break it down:
1. Government spending: This is a part of aggregate demand as it includes the expenditures made by the government on goods and services.
2. Consumption: Consumption is another component of aggregate demand, representing the total spending by households on goods and services.
3. Net exports: Net exports are also a component of aggregate demand, which takes into account the difference between exports and imports of a country.
4. Investment: Investment, referring to the spending on capital goods, is a key component of aggregate demand.
5. Wages: Wages, although important in the economy, are not considered a component of aggregate demand. Wages are the payments made to labor for their work and are not directly included in the calculation of aggregate demand.
Therefore, in the context of aggregate demand, wages are not a component of it.
