Question

What is called the point of 'effective demand'?

Hint:

Effective demand reflects the demand that can be supported by consumers' purchasing power.

Answer 1

Step 1: Define effective demand.
Effective demand refers to the level of demand for goods and services in an economy that is backed by the ability to pay for them. It is the total demand that results in the purchase of goods and services at a given price level.
Step 2: Point of effective demand.
The point of effective demand occurs when the total demand for goods and services in the economy equals the total supply at a specific price level. It determines the equilibrium output in an economy.
Step 3: Conclusion.
Thus, the point of effective demand is the level of demand that ensures the purchase of goods and services at the prevailing market prices. Final Answer: \[ \boxed{\text{The point of effective demand is where total demand equals total supply at a given price level.}} \]