# Aggregate Demand

*Macro & Economy — Finicade finance glossary*

Aggregate demand is total spending in an economy: consumption, investment, government spending and net exports. Managing it is the whole point of countercyclical policy — a rate cut or a stimulus package aims to lift the curve when demand falls short of what the economy can produce. Its composition matters as much as its level, since investment is far more volatile than consumption and drives most of the business cycle.

**Formula:** `AD = C + I + G + (Exports − Imports)`

**Also known as:** AD, total demand

**Related terms:** [Aggregate Supply](https://finicade.com/glossary/aggregate-supply), [GDP (Gross Domestic Product)](https://finicade.com/glossary/gdp), [Fiscal Multiplier](https://finicade.com/glossary/fiscal-multiplier), [Monetary Policy](https://finicade.com/glossary/monetary-policy), [Output Gap](https://finicade.com/glossary/output-gap)

Source: https://finicade.com/glossary/aggregate-demand