Question : The term "aggregate demand" refers to the total demand for:
Option 1: Individual goods and services
Option 2: All goods and services in an economy
Option 3: Imports and exports
Option 4: Government expenditure
Correct Answer:
All goods and services in an economy
Solution : The correct answer is (b) All goods and services in an economy
Aggregate demand represents the total demand for all goods and services within an economy at a given price level and over a specific period. It encompasses the combined demand from all sectors, including individuals, households, businesses, and the government. It reflects the total spending or expenditure on goods and services within an economy, regardless of whether they are produced domestically or imported.
While individual goods and services have their own specific demands, aggregate demand captures the overall demand for all goods and services in the economy as a whole. It includes private consumption expenditure, private investment expenditure, government expenditure, and net exports (exports minus imports). Therefore, option b) correctly identifies that aggregate demand refers to the total demand for all goods and services in an economy.
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