Macroeconomics For Dummies
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Economies run on people, firms, and governments requiring and buying things. A need exists (demand) that firms fulfill (supply). Students of microeconomics spend time learning about the behavior of supply and demand in individual markets. Students of macroeconomics are interested in the economy as a whole, so the emphasis is on aggregate (that is, total) demand for goods and services and aggregate (total) supply.

More specifically, aggregate demand comprises the total demand for goods and services produced in the economy.

Aggregate demand is important because (along with aggregate supply) it determines a country's GDP and price level (and therefore its inflation rate). Changes in aggregate demand also impact the level of unemployment.

Without understanding aggregate demand, policy-makers wouldn't stand much of a chance of being able to control the economy. Indeed the main tools that policy-makers have at their disposal (monetary and fiscal policy) work by influencing aggregate demand.

About This Article

This article is from the book:

About the book authors:

Daniel Richards, PhD, is a professor of economics at Tufts University. He received his PhD from Yale University.

Manzur Rashid, PhD, has taught economics at University College London and Cambridge University.

Peter Antonioni is a senior teaching fellow at University College London.

Daniel Richards, PhD, is a professor of economics at Tufts University. He received his PhD from Yale University.

Manzur Rashid, PhD, has taught economics at University College London and Cambridge University.

Peter Antonioni is a senior teaching fellow at University College London.

Daniel Richards, PhD, is a professor of economics at Tufts University. He received his PhD from Yale University.

Manzur Rashid, PhD, has taught economics at University College London and Cambridge University.

Peter Antonioni is a senior teaching fellow at University College London.

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