Define about aggregate demand and aggregate supply.
|NU Year||Set: 2.(a) Marks: 4 Year: 2012|
Aggregate demand is the overall demand for all goods and services in an entire economy. It's a macroeconomic term that describes the relationship between everything bought within a country and prices. Everything purchased in a country is the same thing as everything produced in a country. Therefore, aggregate demand equals the gross domestic product of that economy.
Aggregate supply, also known as total output, is the total supply of goods and services produced within an economy at a given overall price level in a given period. It is represented by the aggregate supply curve, which describes the relationship between price levels and the quantity of output that firms are willing to provide. Normally, there is a positive relationship between aggregate supply and the price level.