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Define Or Explain the Following Concept: Aggregate Demand - Economics

Short Note

Define or Explain the following concept:

Aggregate Demand

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Solution

Aggregate demand: Aggregate demand implies the total demand of final goods and services by various individuals in all the sectors in an economy. It expresses the total demand in terms of money. In this manner, it can be defined as the actual aggregate expenditure incurred by all the people in an economy on different goods and services.

AD = C + I + G + (X – M)
Where,
Demand by households - Private consumption expenditure (C)
Demand by firms - Private investment expenditure (I)
Demand by government - Government expenditure (G)
Demand by foreign sector- Net exports (X – M)
Where, X is exports and M is imports.

Concept: Concept of Aggregate Demand and Aggregate Supply
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APPEARS IN

Micheal Vaz Economics HSC 12th Standard Maharashtra State Board
Chapter 10 Determinants of Aggregates
Exercise | Q 1.2 | Page 94
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