Aggregate Demand

Aggregate Demand (AD) is the total demand for all goods and services in an economy. It is calculated as the sum of consumer spending (C), investment spending (I), government spending (G), and net exports (NX, which is exports minus imports). This formula shows the relationship between a nation's overall spending and the amount of goods and services it produces within a specific period. Aggregate demand is typically measured within an economic framework to analyze economic performance.

This formula is useful for macroeconomic analysis, policy making, and business strategy as it reflects the overall demand for goods and services and can help forecast economic trends.