Answered: what is aggregate demand and what are…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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what is aggregate demand and what are its advantages and disadvantages within a company?

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Step 1:Definition

Aggregate Demand is the relationship between the quantity of output demanded and the aggregate price level. he aggregate demand curve shows the number of goods and services that people want to buy at a given price level. The aggregate demand curve is downward sloping and it is drawn for a given value of the money supply denoted by $M$ .

The Aggregate demand curve is a downward-sloping curve that is drawn for a given value of the money supply M. The aggregate demand curve implies that as the price level goes higher, the real balances $M / P$ falls, therefore the demand for goods and services falls.

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