Aggregate Demand

Aggregate demand is the total planned spending on final goods and services in an economy at different price levels. In the standard model, it equals consumption, investment, government purchases, and net exports.

Consumption: Household spending on goods and services, excluding purchases of new homes. It is usually the largest component of aggregate demand.
Gross domestic product: The market value of final goods and services produced within a country during a period. The spending approach to GDP uses the same components as aggregate demand.
Fiscal policy: Government decisions about spending and taxation used to influence economic activity. Changes in purchases or taxes can alter aggregate demand.
Aggregate supply: The total quantity of goods and services firms are willing to produce at different price levels. It captures production conditions, while aggregate demand captures planned spending.
Investment: Spending on capital goods, structures, and inventory intended to support future production. Changes in business investment can shift aggregate demand sharply.
National income accounting: A system for measuring production, income, and expenditure across an economy. Its expenditure accounts provide the standard aggregate-demand identity.
Monetary policy: Central-bank actions that influence money, credit conditions, and interest rates. Interest-rate changes affect several components of aggregate demand.
Demand shock: An unexpected event that shifts total planned spending in an economy. It shifts aggregate demand rather than merely moving along its curve.
Government spending: Public-sector purchases of goods and services, including infrastructure and defense. Government purchases enter aggregate demand directly.
Aggregate demand curve: A graph relating the economy-wide price level to planned total spending. It represents aggregate demand across alternative price levels.

Linked from 23 pages