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GREAT DEPRESSION: A period of time from 1929 to 1941 in which the economy experienced high rates of unemployment (averaging well over 10%), low production, and limited investment. This period of stagnation prompted radical changes in the way government viewed it's role in the economy and lead to our modern study of macroeconomics.
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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, 2000-2026. [Accessed: August 7, 2026].
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WHITE GULLIBON
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Today, you are likely to spend a great deal of time watching infomercials trying to buy either a wall poster commemorating the 2000 Olympics or a flower arrangement with a lot of roses for your grandmother. Be on the lookout for slow moving vehicles with darkened windows.
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On a typical day, the United States Mint produces over $1 million worth of dimes.
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"My future starts when I wake up every morning . . . Every day I find something creative to do with my life. " -- Miles Davis, musician
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LRAS
Long Run Aggregate Supply
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