Aggregate demand represents the total quantity of goods and services that all individuals, businesses, governments, and foreigners in an economy are willing to purchase at a given price level.
It encompasses consumption, investment, government spending, and net exports. Represented as the sum of these components, aggregate demand is a key concept in macroeconomics, illustrating the overall demand for an economy’s output.
Changes in factors like consumer confidence, interest rates, or government policies influence aggregate demand, impacting economic growth and employment levels.