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Aggregate demand is a macroeconomic term describing the total demand in an economy for all goods and services at any given price level in a given time period.

As such, aggregate demand is the demand for the gross domestic product of a country.  

Aggregate Demand (AD) = C + I + G + (X-M)

In this formula C stands for total consumer expenditures on goods and services. I stands for the total investment spending by companies for capital goods such as factories, equipment and computers.  G stands for government expenditures for publicly provided goods and services such as roads, bridges and Medicare. X stands for exports and M stands for imports.  They are netted together to represent a country’s balance of trade.

If you were to represent aggregate demand graphically, the aggregate amount of goods and services demanded is represented on the horizontal X-axis, and the overall price level of the entire basket of goods and services is represented on the vertical Y-axis.

The aggregate demand curve, like most typical demand curves, slopes downward from left to right. Demand increases or decreases along the curve as prices for goods and services either increase or decrease. In addition, the curve can shift due to changes in the money supply, or increases and decreases in tax rates.

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