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Financial Terms | |
Aggregate Demand |
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Definition of Aggregate DemandAggregate DemandTotal quantity of goods and services demanded.
Related Terms:Aggregate Demand CurveCombinations of the price level and income for which the goods and services market is in equilibrium, or for which both the goods and services market and the money market are in equilibrium. 45-Degree LineA line representing equilibrium in the goods and services market, on a diagram with aggregate demand on the vertical axis and aggregate supply on the horizontal axis. ADaggregate demand. Aggregate Expenditure Curveaggregate demand for goods and services drawn as a function of the level of national income. Crowding OutDecreases in aggregate demand which accompany an expansionary fiscal policy, dampening the impact of that policy. Demand Management PolicyFiscal or monetary policy designed to influence aggregate demand for goods and services. Incomes PolicyA policy designed to lower inflation without reducing aggregate demand. Wage/price controls are an example. ![]() Transmission MechanismThe channels by which a change in the demand or supply of money affects aggregate demand for goods and services. Aggregate planningA budgeting process using summary-level information to Aggregate Production FunctionAn equation determining aggregate output as a function of aggregate inputs such as labor and capital. Aggregate SupplyTotal quantity of goods and services supplied. Aggregate Supply CurveCombinations of price level and income for which the labor market is in equilibrium. The short-run aggregate supply curve incorporates information and price/wage inflexibilities in the labor market, whereas the long-run aggregate supply curve does not. DemandAn amount desired, in the sense that people are willing and able to pay to obtain this amount. Always associated with a given price. Demand DepositA bank deposit that can be withdrawn on demand, such as a deposit in a checking account. Demand depositsChecking accounts that pay no interest and can be withdrawn upon demand. Demand line of creditA bank line of credit that enables a customer to borrow on a daily or on-demand basis. ![]() Demand LoanA loan which must be repaid in full on demand. Demand master notesShort-term securities that are repayable immediately upon the holder's demand. Demand-Pull InflationInflation whose initial cause is excess demand rather than cost increases. See also cost-push inflation. Demand shockAn event that affects the demand for goods in services in the economy. Excess DemandA situation in which demand exceeds supply. Hedging demandsdemands for securities to hedge particular sources of consumption risk, beyond the usual Monetary AggregateAny measure of the economy's money supply. Money market demand accountAn account that pays interest based on short-term interest rates. Precautionary demand (for money)The need to meet unexpected or extraordinary contingencies with a Speculative demand (for money)The need for cash to take advantage of investment opportunities that may arise. Transaction demand (for money)The need to accommodate a firm's expected cash transactions. ![]() Variable rated demand bond (VRDB)Floating rate bond that can be sold back periodically to the issuer. Warehouse demandThe demand for a part by an outlying warehouse. Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |