What is the distinction between gross domestic product and aggregate demand?

Question:

What is the distinction between gross domestic product and aggregate demand?

Gross Domestic Product

Gross Domestic Product is calculated to find the economic condition of a country. If the gross domestic product produced is less than the aggregate demand, the consumer can face the shortage of supply of the good. If the gross domestic product produced is more than the aggregate demand in the economy, the consumer can face the surplus supply of the goods.

Answer and Explanation:

Aggregate demand specifies the amounts of goods and services that will be consumed at all price levels. This is the demand for the gross domestic product of a country. It is often called effective demand. It shows how price is related to the quantity demanded. On the other hand, gross domestic product is the value of the final goods and services produced in an economy in a given period of time. It does not consider the price levels. It is the quantity of goods produced and aggregate demand is the quantity of goods demanded.


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Gross Domestic Product: Definition and Components

from Economics 102: Macroeconomics

Chapter 4 / Lesson 3
58K

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