What is meant by aggregate demand?

Aggregate demand refers to the total demand for all goods and services in an economy at a given overall price level and within a specified time period. This concept encompasses the collective demand from all sectors of the economy, including households, businesses, and the government, for everything from consumer products to investment goods and government services. It represents the total spending on the country’s goods and services and plays a critical role in determining the overall economic activity, influencing levels of output, employment, and inflation.

Option D is accurate because it captures the essence of what aggregate demand is—the holistic view of demand across the entire economy, reflecting the sum of demands from various agents for different goods and services. Understanding this aggregate measure is crucial for analyzing economic trends and implementing policies aimed at stimulating growth or controlling inflation.