Aggregate Demand and related concepts

Class 12 | Macroeconomics

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Aggregate Demand refers to total value of all final goods and services that all the sectors are planning to buy in an economy. AD represents the total expenditure on goods and services in an economy during a period of time. So, aggregate demand and aggregate expenditure mean the same.


· Aggregate Supply is the money value of all final goods and services available for purchase by an economy during a given period. It is the flow of goods and services in the economy. Since, money value of final goods and services is equal to net value added, AS is nothing but the national income.


Autonomous consumption is not changed/affected by change in income. It is minimum level of consumption, even when income is zero. Consumption expenditure at zero level of income is called autonomous consumption. It is income inelastic.

Induced consumption is the expenditure that is affected by change in income. It is indicated by MPC × Y. Induced consumption is the portion of consumption that varies with income.


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What You Will Learn!

  • Meaning, schedule and graph of Aggregate Demand
  • Meaning, schedule and graph of Aggregate Supply
  • Consumption and Savings Function
  • APC, APS, MPC, MPS
  • Determinants of Investment, Full employment

Who Should Attend!

  • Class 12 CBSE Students
  • Class 12 Students with other boards (ICSE, UP board, Punjab Board)
  • Students doing graduation