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MATERIALS BALANCE: A hard and fast rule that the total amount of stuff removed from the natural environment will be eventually returned, probably as pollution. This is based on a fundamental law of physics that says material can be neither created nor destroyed, but only transformed. During any given period (such as a year) the quantity of materials returned to the environment is the difference between the quantity extracted and the quantity used by 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. | Two Similar Curves | 
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To illustrate the specific aggregate demand and market demand curve similarities and differences consider the graph of a negatively sloped curve displayed here. Is this a market demand curve or an aggregate demand curve? A cursory look suggests that it could be either.To reveal the similarities between the both curves, click the [Market Demand] and [Aggregate Demand] buttons. Doing so illustrates that both curves are negatively sloped, with each virtually overlaying the other. Consider the differences between these two curves. - First, note that for the market demand curve, the vertical axis measures demand price and the horizontal axis measures quantity demanded. For aggregate demand curve, however, the vertical axis measures the price level (GDP price deflator) and the horizontal axis measures real production (real GDP).
- Second, the negative slope of the market curve reflects the law of demand and is attributable to the income effect and the substitution effect. In contrast, the negative slope of the aggregate demand curve is based the real-balance effect, interest-rate effect, and net-export effect. Similar, but different.
Most notable, the differences between market demand and aggregate demand mean that it is not possible to merely add up, or aggregate, the market demand curves for the thousands of goods produced in the economy to derive the aggregate demand curve. The aggregate demand curve dances to its own music and plays be its own set of rules.
Recommended Citation:AGGREGATE DEMAND AND MARKET DEMAND, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2017. [Accessed: October 18, 2017].
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GREEN LOGIGUIN
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Today, you are likely to spend a great deal of time watching infomercials trying to buy either a turbo-powered vacuum cleaner or a battery-powered, rechargeable vacuum cleaner. Be on the lookout for empty parking spaces that appear to be near the entrance to a store.
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Lewis Carroll, the author of Alice in Wonderland, was the pseudonym of Charles Dodgson, an accomplished mathematician and economist.
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"Executives who get there and stay suggest solutions when they present the problems. " -- Malcolm Forbes, business executive
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RTA
Regional Trading Arrangement
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