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DEMAND-DRIVEN BUSINESS CYCLES: Business cycle instability caused by changes in one or more of the four aggregate demand expenditures on gross domestic product--consumption, investment, government purchases, and net exports. This is one of two basic types of business cycles; the other being supply-drive business cycle. Demand-driven business cycles tend to be the more common of the two types. In general, demand-driven business cycles are more responsible for short-term instability, while supply-driven business cycles tend to be more closely associated with long-run changes in the economy.

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AGGREGATE DEMAND AND MARKET DEMAND

The aggregate demand curve, or AD curve, has similarities to, but differences from, the standard market demand curve. Both are negatively sloped. Both relate price and quantity. However, the market demand curve is negatively sloped because of the income and substitution effects and the aggregate demand curve is negatively sloped because of the real-balance, interest-rate, and net-export effects.

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Today, you are likely to spend a great deal of time at the confiscated property police auction hoping to buy either a video game player or an AC adapter that won't fry your computer. Be on the lookout for crowded shopping malls.
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The first paper currency used in North America was pasteboard playing cards "temporarily" authorized as money by the colonial governor of French Canada, awaiting "real money" from France.
"We succeed in enterprises (that) demand the positive qualities we possess, but we excel in those (that) can also make use of our defects."

-- Alexis de Tocqueville, Statesman

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