Determination of Income and Employment — Economics STD 12 Humanities & Commerce — Question

1. Aggregate demand:

In macroeconomics, aggregate demand (AD) or domestic final demand (DFD) is the total demand for final goods and services in an economy at a given time. It specifies the amounts of goods and services that will be purchased at all possible price levels.

2. Aggregate supply:

Aggregate supply (AS) is defined as the total amount of goods and services produced and supplied by an economy's firms over a specific time period at given price levels.

3. Excess demand:

Reasons and Impact of Excess Demand! Excess demand refers to the situation when aggregate demand (AD) is more than the aggregate supply (AS) corresponding to full employment level of output in the economy.