Aggregate Demand


DEFINITION of 'Aggregate Demand'

The total amount of goods and services demanded in the economy at a given overall price level and in a given time period. It is represented by the aggregate-demand curve, which describes the relationship between price levels and the quantity of output that firms are willing to provide. Normally there is a negative relationship between aggregate demand and the price level. Also known as "total spending".


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BREAKING DOWN 'Aggregate Demand'

Aggregate demand is the demand for the gross domestic product (GDP) of a country, and is represented by this formula:

Aggregate Demand (AD) = C + I + G + (X-M) C = Consumers' expenditures on goods and services. I = Investment spending by companies on capital goods. G = Government expenditures on publicly provided goods and services. X = Exports of goods and services. M = Imports of goods and services.

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  1. How can the federal reserve increase aggregate demand?

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  2. Do rising unemployment rates tend to increase or decrease investor sentiment and ...

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  3. How does contractionary fiscal policy lead to the opposite of the crowding out effect?

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  4. What is demand-side economics?

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  5. How do fiscal and monetary policies affect aggregate demand?

    Aggregate demand is a macroeconomic concept representing the total demand for goods and services in an economy. This value ... Read Full Answer >>
  6. What factors cause shifts in aggregate demand?

    Aggregate demand, or AD, is defined as the total amount of goods and services consumers are willing to purchase in a given ... Read Full Answer >>
  7. What is the effect of a fiscal deficit on the economy?

    Fiscal deficits arise whenever a government spends more money than it brings in during the fiscal year. This imbalance, sometimes ... Read Full Answer >>
  8. Why is Keynesian economics sometimes called demand-side economics?

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