aggregate demand

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Aggregate Demand

The total demand of goods and services in an economy at a given overall price and time. Aggregate demand is tracked on an aggregate demand curve, which plots demand against price. When prices are rising, this indicates that the aggregate supply in the economy is inadequate to meet the aggregate demand; this leads businesses to expand their operations and produce more goods and services.

aggregate demand

the total demand for a firm's product/s. The term is also used to describe the total demand placed on a production unit in order to calculate MANUFACTURING RESOURCE PLANNING (MRP II) requirements.

aggregate demand

or

aggregate expenditure

the total amount of expenditure (in nominal terms) on domestic goods and services. In the CIRCULAR FLOW OF NATIONAL INCOME MODEL aggregate demand is made up of CONSUMPTION EXPENDITURE (C), INVESTMENT EXPENDITURE (I), GOVERNMENT EXPENDITURE (G) and net EXPORTS (exports less imports) (E):

Some of the components of aggregate demand are relatively stable and change only slowly over time (e.g. consumption expenditure); others are much more volatile and change rapidly, causing fluctuations in the level of economic activity (e.g. investment expenditure).

In 2003, consumption expenditure accounted for 52%, investment expenditure accounted for 13%, government expenditure accounted for 15% and exports accounted for 20% of gross final expenditure (GFE) on domestically produced output. (GFE minus imports = GROSS DOMESTIC PRODUCT). See Fig. 133 (a) NATIONAL INCOME ACCOUNTS.

Aggregate demand interacts with AGGREGATE SUPPLY to determine the EQUILIBRIUM LEVEL OF NATIONAL INCOME. Governments seek to regulate the level of aggregate demand in order to maintain FULL EMPLOYMENT, avoid INFLATION, promote ECONOMIC GROWTH and secure BALANCE-OF-PAYMENTS EQUILIBRIUM through the use of FISCAL POLICY and MONETARY POLICY. See AGGREGATE DEMAND SCHEDULE, ACTUAL GROSS NATIONAL PRODUCTS DEFLATIONARY GAP, INFLATIONARY GAP, BUSINESS CYCLE, STABILIZATION POLICY, POTENTIAL GROSS NATIONAL PRODUCT.

References in periodicals archive ?
The board of directors authorized an aggregate expenditure of up to USD 15 million for this program.
This indicates these countries have already a weakness in their aggregate expenditure. An increase in their nominal interest rate will make this problem worse and opens more questions about growth prospects in 2018 and 2019.
Scaling down the projects through a reduction in sovereign spending will reduce the mismatch between aggregate expenditure and production capacity.
With the new investment, Amplus's aggregate expenditure is Rs.
The per member per year (PMPY) expenditures for children with NC-CDs was significantly less than that of children with complex chronic disease (C-CDs), but the annual aggregate expenditure for the NC-CD group represents a substantial cost because of the high prevalence of these conditions.
Earlier studies by Prabhu (1997), UNDP (1997) and Chelliah and Sudarshan (1999) have shown that social sector expenditure either taken as a proportion of GDP, or as a proportion of aggregate expenditure started declining for the majority of the states from the mid 1980s.
Their aggregate expenditure is just PS4.1 million, while Villa have dropped ten times that (PS41.8 million), a figure which excludes addons such as signing-on fees, bonuses and agents' fees.
They welcomed the authorities determination to adhere to the aggregate expenditure ceiling this year, while noting that additional consolidation should not be implemented if growth disappoints.
Even though the growth in gross income was higher as compared to previous year's numbers, an increase in administrative expenses led to an increase in aggregate expenditure, pulling down the increase in net pro1/4ut from 22.3 per cent in 2011 to 6.6 per cent in 2012.
These include a firm commitment by Gold Fields to spend $4 million within the first 18 months, with additional expenditures to be incurred at $5 million per year for an aggregate expenditure of $19 million.
However, the assumption that money responded passively to the various real forces that determine the combined total of real aggregate expenditure and inflation (nominal aggregate expenditure) removed money from consideration as a useful policy instrument.