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LSDefine
Simple English definitions for legal terms
aggregate demand
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A quick definition of aggregate demand:
Aggregate demand refers to the total amount of goods and services that people want to buy in an economy. It includes the demand from consumers, businesses, and the government. When aggregate demand is high, it means that people are spending more money, which can lead to economic growth. When aggregate demand is low, it can lead to a recession or economic slowdown.
A more thorough explanation:
Definition: Aggregate demand refers to the total amount of goods and services that consumers, businesses, and the government are willing and able to buy at a given price level in a particular economy.
Example: Let's say the government increases spending on infrastructure projects, such as building new roads and bridges. This will increase the demand for construction materials, such as cement and steel, and also create jobs. As a result, consumers will have more money to spend, and businesses will have more customers. This will lead to an increase in aggregate demand.
Explanation: The example illustrates how an increase in government spending can lead to an increase in aggregate demand. When the government spends money on infrastructure projects, it creates jobs and stimulates economic activity. This, in turn, leads to an increase in consumer spending and business investment, which further boosts aggregate demand. Conversely, a decrease in government spending can lead to a decrease in aggregate demand, as it reduces the amount of money flowing into the economy.