The concept of Aggregate Demand is used to measure the willingness and ability of individuals and firms to consume goods and services. The Aggregate demand curve is a graphical representation of the GDP, which is the sum of the consumption, investment, governments spending and net exports in the economy. It is a downward sloping curve toward the right.

"Supply creates its on Demand" - This was the theory of many economists prior to the Great Depression of the 1930's. This theory implies that income earned producing certain goods and services could purchase and identical quantity of other such products. However, in an economy filled with complexities and uncertainty, this theory may not always hold true. This led to famous British Economist John Maynard Keynes, father of Keynesian Economics, to come up with the concept of Aggregate Demand. His concept suggests that the ability to spend - Aggregate Demand...