Aggregate Demand
Statement
Aggregate demand (AD) is the total demand for all domestically produced final goods and services by households, firms, the government and the foreign sector at every general price level over a period of time.
Notes
Aggregate demand is the sum of four expenditure components — — namely consumer expenditure, investment, government expenditure and net exports. It is plotted against the general price level (GPL), a measure of overall prices for a set of goods and services in an economy in a given period, normalised relative to a base set; and real national output / real national income (RNO / RNI), which is gross national income with the effects of inflation removed. The curve is downward-sloping in GPL, and the forces behind each component — and what shifts the whole curve — are set out in the components of aggregate demand.