Question

Explain the significance of aggregate demand in an economy .

Answer 1

Dear student Aggregate demand tells the quantity of goods and services demanded in an economy at a given price level. In effect, the aggregate demand curve is a just like any other demand curve, but for the sum total of all goods and services in an economy. It tells the total amount that all consumers, businesses, and the government are willing to spend on goods and services at different price levels. Thus aggregate demand implies sum total of demand by different sectors. These sectors are households, firms, government and foreign sector. Regards