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AGGREGATE DEMAND CURVE: A graphical representation of the relation between aggregate expenditures on real production and the price level, holding all ceteris paribus aggregate demand determinants constant. The aggregate demand, or AD, curve is one side of the graphical presentation of the aggregate market. The other side is occupied by the aggregate supply curve (which is actually two curves, the long-run aggregate supply curve and the short-run aggregate supply curve). The negative slope of the aggregate demand curve captures the inverse relation between aggregate expenditures on real production and the price level. This negative slope is attributable to the interest-rate effect, real-balance effect, and net-export effect.

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DEMAND PRICE

The maximum price that buyers are willing and able to pay for a given quantity of a good. While buyers might be willing and able to pay less than the demand price for a given quantity, they are not willing and able to pay more. The demand curve is a plot of the demand price for each quantity.

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