Meaning
Understanding the total demand for goods and services in an economy is fundamental to economic analysis.Definition
Aggregate Demand (AD) is the total demand for all finished goods and services produced within an economy at a given overall price level and time period.Components of Aggregate Demand
Its key components include household consumption (C), business investment (I), government spending (G), and net exports (exports minus imports, X-M). The formula is AD = C + I + G + (X-M).Factors Affecting Aggregate Demand
Key factors influencing aggregate demand include interest rates, consumer and business confidence, government fiscal policy (taxation and spending), and exchange rates.Author
