Readers Question: what does AD stand for in economic terms??
AD = Aggregate Demand.
Aggregate Demand is composed of various factors C, I, G, X – M
C= Consumer spending
I = Investment (Gross fixed Capital Formation)
G= Government Spending
AD places a crucial role in determining the level of national output in an economy. Although Monetarists will argue it is AS which will determine the long run trend rate of growth.