What is aggregate demand?

Aggregate demand is a concept that economists use to quantify the total demand for goods and services within a national economy at a given time. To determine aggregate demand, consumption, government and investment expenditures are added together with net exports.

John Maynard Keynes introduced this key concept into the study of macroeconomics, and it is considered one of the most fundamental elements of measuring the productivity of the United States economy. Aggregate demand is the basis for economic theories that are used to determine figures for unemployment rates and a country's income for a given year. Aggregate demand is also commonly referred to as aggregate expenditure.