Aggregate demand is a fundamental principle of macroeconomics. The concept explains what is meant by the aggregate demand curve and what are its strengths and limitations and provides case evidence of aggregate demand in practice.
Aggregate Demand Definition
The aggregate demand (AD) curve shows the total quantity of goods and services demanded in the economy by households, companies, government, and customers abroad for any price level. An economy is said to be in equilibrium when in the long-run AD equals its GDP. Together with the aggregated supply (AS) curve it forms the basic macroeconomic model AD-AS for the analysis of short-run effects of several events and policies (Mankiw, 2011).
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Aggregate Demand References (4 of up to 20) *
- Barro, R.J., 2009. Government Spending Is No Free Lunch. Wall Street Journal, Jan 22.
- Blanchard, O.J., Quah, D., 1990. The Dynamic Effects of Aggregate Demand and Supply Disturbances. NBER Working Paper No. 2737.
- Jain, T. R., Khanna, O. P., Grover, M. L., and Jain, D. K. (2007) Macro Economics, VK Publications, New Delhi.
- Mankiw, N.G., 2011. Principles of Economics. Cengage Learning.
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