Economics Part B

Table of Contents

Aggregate demand and supply

Aggregate demand 

The total demand by residents of the country for goods and services (including public services) is called the aggregate demand. We will return to this discussion later.

When a country exports, an export component is added to the aggregate demand, i.e., demand from those residing abroad.

Aggregate supply

The total amount of goods and services produced in a country is called the aggregate supply. Aggregate supply in a closed economy equals the GDP. When a country imports, this element is added to aggregate supply, which contributes to increasing the supply of goods in the economy.