Aggregate Demand Definition

Definition: In macroeconomics, it is the total demand for final goods and services within an economy at a given period and overall price level. It makes up the national income of an economy.


AD = C + I + G + (X-M)

AD = Aggregate demand

C = Consumers’ expenditures on goods and services.

I = Investment spending by companies on capital goods

G = Government expenditures on publicly provided goods and services

X = Exports of goods and services

M = Imports of goods and services