Aggregate Demand And Domestic Final Demand Essay

711 Words Apr 29th, 2016 3 Pages
I will in the first place, explain what aggregate demand is. Aggregate demand (AD) or Domestic Final Demand (DFD), is the total that is demanded for the final goods and services in a given economy at a particular time. It explains the amount of goods and services that will be purchased at all levels. So, it might be the demand for the gross domestic product (GDP) of a particular country. While aggregate demand is the total that is demanded for the final goods and services in a given economy at a particular time, then the aggregate supply (AS) or domestic final supply(DFS), will be the over all total supply of the same goods and services that companies in a country 's economic plan on selling in a particular period of time. So, it is the total of goods as well as services that companies are ready and are able to sell at a particular price level in an economy. Short - run aggregate supply (SAS), normally shows different quantities of real output in the short - run which will be supplied at different prices. There are again, other things that will effect the short - run aggregate supply. That is the short - run aggregate supply (SAS) curve which will be upward sloping because companies decide to increase price levels when demand increase due to the fact that, in auction markets, there are upward sloping supply curves. The sticky - wage model and the sticky - price model, are the two main theories that explains why the short run aggregate (SAS) curve is upward sloping.…

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