Aggregate Demand is the total amount of Demand in the Economy at a given time. It is an important macroeconomic factor because it helps determine, forsee and ,when manipulated ,prevent inflation. Inflation is one of the the main macro-economic problems and is as important as unemployment.
Macroeconomic deals with the functioning of the economy as the whole. It is concerned with economy wide issues such as unemployment, inflation, and economics growth/development; it is the study of economics from a broad perspective of the resources and factors of production in an economy.
the concern is that unemployment may increase because fewer workers are needed.
When aggregate demand and aggregate supply both decrease, the result is no change to price. As price increases, aggregate demand decreases, and aggregate supply increases.
nothing
Fiscal policy is centered on aggregate demand.
Aggregate Demand
Macroeconomic deals with the functioning of the economy as the whole. It is concerned with economy wide issues such as unemployment, inflation, and economics growth/development; it is the study of economics from a broad perspective of the resources and factors of production in an economy.
it increases
Cyclical Unemployment results from business recessions that occur when aggregate (total) demand is insufficient to create full employment.Cyclical Unemployment is due to contractions in the economy
the concern is that unemployment may increase because fewer workers are needed.
When aggregate demand and aggregate supply both decrease, the result is no change to price. As price increases, aggregate demand decreases, and aggregate supply increases.
nothing
Fiscal policy is centered on aggregate demand.
No effect. Spending will decrease Aggregate Demand, lower taxes will raise Aggregate Demand
Total income depends on total employment which depends on effective demand which in turn depends on consumption expenditure and investment expenditure. Consumption depends on income and propensity to consume. Investment depends upon the marginal efficiency of capital and the rate of interest. J. M. Keynes made it clear that the level of employment depends on aggregate demand and aggregate supply. The equilibrium level of income or output depends on the relationship between the aggregate demand curve and aggregate supply curve. As Keynes was interested in the immediate problems of the short run, he ignored the aggregate supply function and focused on aggregate demand. And he attributed unemployment to deficiency in aggregate demand.
The interest rate does affect aggregate demand. As the interest rate falls, aggregate demand increases and vice-versa.
Aggregate demand curve.