Please explain in layman s terms what is aggregate demand and aggregate social supply

1. Generally speaking, aggregate social demand refers to the total amount of products, services and purchasing power actually formed by social expenditure available for investment and consumption in a certain period of time (usually one year). It mainly includes domestic demand, including investment demand and consumption demand. Investment demand includes investment demand for fixed assets and investment demand for current assets.

Consumer needs include the individual consumer needs of residents and the consumer needs of social groups. The second is external demand, that is, the export of products and services.

2. Generally speaking, comprehensive social supply and comprehensive social demand are a pair of basic concepts in macroeconomics. Aggregate social supply refers to the total amount of products and services that social production activities can actually provide to the market in a certain period of time (usually one year). It consists of two parts:

First, the products and services provided by domestic production activities, including those provided by agriculture and forestry, animal husbandry and fishery, industry, construction and other industries, as well as services provided by transportation, post and telecommunications, and banks. And insurance, business services, that's what GDP. The second is the products and services provided by foreign countries, that is, imported goods and services.

Extended Materials. 1. When the total social demand is greater than the total social supply, the purchase expenditure will be reduced, directly or indirectly reducing the total social demand. Aggregate demand is greater than aggregate supply, which is manifested in product shortages, production expansion, and ****, i.e., inflation.

Total demand refers to the total demand for products and services. Aggregate demand is expressed as an effective demand with the ability to pay. It consists of the social demand formed by the distribution of the gross national product and the demand generated by the issuance of money by the banks.

Therefore, aggregate demand refers to the amount of capital that residents, enterprises and enterprises will invest when conditions such as income and income are fixed, that is, the total expenditure of each unit. Aggregate supply is the total output or output of an economy. It represents the possible output of an economic and social basic resource when it is used for production.

In general, the total ** depends mainly on the quantity of production inputs (mainly labor and capital) and the efficiency combined with these inputs.

2. Supply and demand refers to the supply and demand relationship of commodities under the conditions of commodity economy. It also reflects the relationship between production and consumption in the market. Supply and demand refers to the relationship between all the products and services provided by society and the needs of society within a certain period of time.

This relationship includes qualitative adaptability and quantitative equilibrium.

The total social supply refers to the total amount of goods and services that can be provided to the society in a certain period of time. It consists of two parts: the domestic production component, which is the gross domestic product; Total value of goods and services imported.

Aggregate social demand refers to the purchasing power of goods and services formed through various channels in a certain period of time, including domestic payment power and foreign payment power (export of goods and services).

1. The relationship between aggregate supply and aggregate demand is a comprehensive reflection of the changes in the proportional relations of production, distribution, circulation, and consumption of the entire national economy and their mutual relations. Through the total calculation and analysis of the total supply and demand of the society, we can describe the operation of the national economy and its main relationship in general, describe the process and results of realizing the economic cycle under the condition of social reproduction, and provide a basic basis for studying economic development and formulating and adopting corresponding regulation and control measures.

Second, the aggregate demand curve shows the relationship between the aggregate level and the aggregate demand. The aggregate demand curve slopes to the lower right, indicating that the total amount of goods that people are willing to buy continues to decline as the level of ** increases; And with the decline of **, the total amount of goods that people are willing to buy is rising. The downward slope of the aggregate demand curve mainly depends on the results of the combined effect of three factors: the real asset effect, the intertemporal substitution effect and the open substitution effect.

When the non-determinants of aggregate demand change, the aggregate demand curve shifts. From a macroeconomic point of view, the main factors that cause the shift of the aggregate demand curve are consumption, investment, ** purchases, and net exports. The aggregate social supply is the sum of the products and services produced by various sectors of the national economy in a certain period of time.

3. Aggregate supply can be expressed in terms of the sum of the factors of production supplied by society in a given period of time, or the sum of the remuneration received by the factors of production. The aggregate supply curve shows the relationship between the aggregate level and the aggregate supply. In the long run, the aggregate supply does not depend on the general price level, but on the capital, labor, and production techniques used to turn inputs into outputs in the economy, so the aggregate supply curve is vertical.

In the short run, when the price level deviates from people's expectations, the supply deviates from the natural level determined by various factors of production due to illusions, sticky wages, or sticky **. When prices are higher than expected, supply is higher than their natural rate, and when prices are lower than expected, supply is lower than their natural rate, so the short-term aggregate supply curve is sloping upwards to the right.

The aggregate demand of society is the original hope of people to buy things. For example, everyone has to buy moon cakes during the Mid-Autumn Festival, which is called the total demand of the society. The total social supply is the amount of products produced by the factory. For example, the factory produces more bicycles this year, which means that the total supply of bicycles in society is large.

Aggregate social demand refers to the total amount of money used by all aspects of society for construction and purchase within a certain time frame. Aggregate social supply refers to the total amount of goods and services provided by all aspects of society in a certain period.

The composition and changes in aggregate demand and aggregate supply are the main reasons for the fluctuations in the economic cycle. When aggregate demand grows faster than aggregate supply, it can lead to economic overheating and inflation; When aggregate demand grows slower than aggregate supply, it leads to recession and unemployment. When the growth rate of aggregate social demand is consistent with that of aggregate social supply, the macroeconomy can remain relatively stable.

In addition, the composition and change of aggregate social demand and aggregate social supply will also be affected by a variety of factors, such as consumption, investment, ** expenditure, net exports, etc. Changes in these factors will affect the overall economic situation, so understanding the composition and changes of aggregate social demand and aggregate social supply is of great significance for formulating appropriate economic policies.

It is a fiscal surplus policy, and the state budget expenditure will form the purchasing power of money and is an integral part of the total social demand, so by adjusting the relationship between the state budget revenue and expenditure, it can play a role in adjusting the balance of the total supply and demand in society.

When the aggregate social demand is greater than the aggregate social supply, it can be adjusted through the implementation of the surplus policy that the state budget revenue is greater than the expenditure; When the aggregate social supply is greater than the aggregate social demand, it can be adjusted through the implementation of the deficit policy in which the state budget expenditure is greater than the income; When the total supply and demand of the society are balanced, the state budget should be balanced by the implementation of a neutral policy of balance between revenue and expenditure.

Extended Materials.

Aggregate social demand is the total amount of goods and services purchased in a country or region over a given period of time (e.g., in one year): its composition can be divided into two types.

First, it is divided into resident consumer purchase, enterprise purchase, purchase and export;

Second, it is divided into four parts: private (residents and society) consumption, ** consumption, fixed capital formation (investment) and export (export of goods and labor services).

Among them, private consumption refers to all goods and services purchased for families, individuals and non-profit organizations serving families. Consumption refers to the purchase of goods and services, but does not include the goods used for capital formation such as strategic material inventories, which can be specifically divided into two categories, one is the remuneration of employees, and the other is the purchase of goods for enterprises and foreign countries.

Fixed capital formation refers to the total amount of purchases incurred by the current fixed capital investment and the increase in inventories in the current period. The export of goods and services refers to the export of goods and services in the current period, that is, the foreign demand for goods and services in the country.

Aggregate social demand consists of two components: domestic demand and foreign demand.

1. Domestic demand.

Domestic demand includes investment demand and consumption demand.

1) Investment demand (also known as investment expenditure) refers to the demand for investment products formed by the expenditure of monetary funds in a certain period of time by the whole society.

In terms of composition, investment in fixed assets includes investment in current assets.

It is divided into two parts: one part is used for new fixed asset investment, which is equivalent to what is commonly referred to as capital investment; The other part is used for the investment of new current assets, mainly used to increase the inventory of enterprises and the national material reserves.

2) Consumer demand (also known as consumer expenditure) refers to the demand for consumer goods (including services) formed by the expenditure of monetary funds in a certain period of time.

From the perspective of consumption form, total social consumption includes two parts: personal consumption and social public consumption.

The demand for public consumption in society mainly includes two parts: one is the demand for public consumer goods and services in the service sector; The second is the demand for consumer goods and services for collective consumption in the material production sector.

2. Foreign demand.

Foreign demand, i.e., the export of goods and services.

【Answer】B 【Analysis】The state budget expenditure will form the purchasing power of money, which is a component of the total social demand, therefore, by adjusting the relationship between the state budget revenue and expenditure, it can play a role in adjusting the total balance of social supply and demand. When the aggregate social demand is greater than the aggregate social supply, it can be adjusted through the implementation of the surplus policy that the state budget revenue is greater than the expenditure; When the aggregate social supply is greater than the aggregate social demand, it can be adjusted through the implementation of the deficit policy in which the state budget expenditure is greater than the income; When the total supply and demand of the society are balanced, the state budget should be balanced by the implementation of a neutral policy of balance between revenue and expenditure.

1. Under the Keynesian aggregate supply curve, changes in aggregate demand will only cause changes in the same direction of national income, and will not cause changes in the ** level.

2. Under the short-term aggregate supply curve, the increase or decrease of aggregate demand causes an increase or decrease in the same direction of national income and **.

3. Under the long-term aggregate supply curve, the increase or decrease of aggregate demand will only cause a corresponding rise or fall in the ** level, and the national income will not change.

FYI.

Answer] :d 2022 textbook p25

Knowledge points: aggregate demand and aggregate supply. In the two-dimensional space composed of ** level and output quantity, aggregate demand (AD) is shown as a downward inclined curve, and aggregate supply (AS) is shown as an upward inclined curve. National output and ** level are balanced at the intersection of the two curves; Above the equilibrium point, the aggregate demand is less than the aggregate supply, and the slag stove ** faces downward pressure; Below the equilibrium point, aggregate demand is greater than aggregate supply, facing upward pressure.

If aggregate demand is greater than aggregate supply, inflation will occur, and this is the root cause of inflation. This is the current situation in our country.

That is, there are nine steamed buns for ten people to eat.

1. Aggregate social demand.

Aggregate social demand refers to the total purchasing power of goods and services actually formed by the expenditure of the society that can be used for investment and consumption in a certain period of time (usually one year) in a country or region.

It consists of two parts: one is domestic demand, including investment demand and consumption demand. The investment demand consists of the investment demand for fixed assets and the investment demand for current assets.

Consumption demand is composed of individual consumption needs of residents and consumption needs of social groups. The second is foreign demand, that is, the export of products and services.

Second, the total supply of society.

Aggregate social supply refers to the total amount of products and services that can be provided to the market by social production activities in a certain period of time (usually one year) for final use.

It consists of two parts: one is the products and services provided by domestic production activities, including those provided by agriculture, forestry, animal husbandry and fishery, industry, construction and other industries, and also includes the services provided by transportation, post and telecommunications, banking and insurance, commercial services and other industries, that is, gross domestic product. The second is the products and services provided by foreign countries, that is, the import of goods and services.