Russ Roberts on Aggregate Demand
By Arnold Kling
When an economy is not healthy, there is less exchange. There is less buying and selling of goods and services and labor. To describe that unhealthiness as less aggregate demand is just to put the problem into different words.
That is, of course, my view. A lot of people think they understand aggregate demand. But journalists have a very different understanding than what is in a freshman textbook. And the freshman textbook differs from the intermediate textbook, where you explicitly talk about what makes the aggregate demand curve slope down and the aggregate supply curve slope up. While the intermediate textbook differs from the graduate textbook, where the intermediate AS and AD curves disappear and everything gets turned into Euler equations in order to satisfy rational expectations.
And then you get what Krulong describe as aggregate demand something which at times sounds to me like newspaper macroeconomics and at other times sounds like intermediate macroeconomics. In any case, they are really certain about it.
Related: Tim Kane talks about the importance of long-term growth.