Aggregate demand
What Aggregate demand means in Economics B A-Level, as defined for Pearson Edexcel.
Definitions of Aggregate demand
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Reference: Pearson Edexcel
Total demand in the economy, which increases when expansionary fiscal or monetary policy is used to stimulate growth and reduce cyclical unemployment.
The total demand in the economy that demand-side policies, including monetary and fiscal measures, manipulate to achieve macroeconomic objectives.
The total level of demand in the economy, whose changing level has significant impacts on the macroeconomic objectives of the whole economy.
The total planned expenditure on goods and services in an economy at a given price level, calculated as AD = C + I + G + (X-M).
The total demand in the economy that contractionary policies aim to reduce and expansionary policies aim to stimulate.
The total demand in the economy that credit stimulates when consumers and businesses borrow money for immediate use.
Topics that use Aggregate demand
- Circular flow of income, expenditure and output (Pearson Edexcel A-Level)
- Demand-side policies (Pearson Edexcel A-Level)
- Potential policy conflicts and trade-offs (Pearson Edexcel A-Level)
- Types and sources of credit and the impact of credit within the economy (Pearson Edexcel A-Level)
Related terms
- Demand-pull inflation
- Investment
- Macroeconomic equilibrium
- Macroeconomic objectives
- Policy conflicts
- Business investment
- Economic agents
- Economic trade-offs
Using Aggregate demand in the exam
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