Aggregate demand
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noun; a concept central to the idea of Keynesian economics. Under this theory, business cycles (recessions, depressions, booms, recoveries) are caused by a failure of total demand across the entire economy to match total output.
[Aggregate demand] is not merely influenced by peoples ability to buy what they produce; it is also influenced by the [marginal propensity to consume] ([MPC]). If the MPC is less than 1, then an increase in national income will be matched by a smaller increase in [aggregate demand], causing unemployment to rise and prices to fall. -
the total demand for goods and services within an economy:
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