Difference between aggregate demand and aggregate supply

Dear student,

Aggregate demand is the sum of consumption demand, investment demand, government demand for goods and services, plus net exports.  Aggregate supply is simply total output i.e. the total production of goods and services in the economy. 

The aggregate supply curve shows the relationship between a nation's overall price level, and the quantity of goods and services produces by that nation's suppliers. The curve is upward sloping in the short run and vertical, or close to vertical, in the long run.

The aggregate demand curve shows, at various price levels, the quantity of goods and services produced domestically that consumers, businesses, governments and foreigners (net exports) are willing to purchase during the period of concern. The curve slopes downward to the right, indicating that as price levels decrease (increase), more (less) goods and services are demanded.

Regards

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