Uploaded August 2026 | Updated September 2026, 2 weeks ago
Aggregate demand (AD) is the total planned expenditure on a country's goods and services at a given price level over a specific period.It is defined by the equation $AD = C + I + G + (X - M)$, which represents consumer spending, business investment, government expenditure, and net exports. The AD curve slopes downwards due to the wealth, interest rate, and exchange rate effects, meaning lower overall price levels stimulate higher total spending. Shifts in the curve occur when external factors—such as changes in fiscal policy, consumer confidence, or global markets - alter these components, driving fluctuations in economic growth and inflation.
Aggregate demand (AD) is the total planned expenditure on a country's goods and services at a given price level over a specific period.It is defined by the equation $AD = C + I + G + (X - M)$, which represents consumer spending, business investment, government expenditure, and net exports. The AD curve slopes downwards due to the wealth, interest rate, and exchange rate effects, meaning lower overall price levels stimulate higher total spending. Shifts in the curve occur when external factors—such as changes in fiscal policy, consumer confidence, or global markets - alter these components, driving fluctuations in economic growth and inflation.
