Question

What is meant by aggregate demand?

Hint:

Aggregate Demand is the total spending in an entire country: by people (C), by businesses (I), by the government (G), and by foreigners (Net Exports).

Answer 1

Aggregate Demand (AD) represents the total demand for all final goods and services produced in an economy at a given overall price level during a specific time period. It is the sum of all planned expenditures in the economy and is calculated as: \[ AD = C + I + G + (X - M) \] where C is Consumption, I is Investment, G is Government Spending, and (X - M) is Net Exports (Exports minus Imports).