aggregate demand

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The sum of demands for all the goods and services in an economy at any particular time. Made a central concept in macroeconomics by J. M. Keynes (1883–1946), it is usually defined as the sum of consumers' expenditure (see consumption), investment, government expenditure, and imports less exports. Keynesian theory proposes that the free market will not always maintain a sufficient level of aggregate demand to ensure full employment and that at such times the government should seek to stimulate aggregate demand. However, many macroeconomists have questioned the feasibility of such policies and this remains a critical issue in macroeconomics. See also aggregate supply.

Subjects: Marketing.

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