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Explain effective demand in your own words ​
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42 votes
42 votes
Explain effective demand in your
own words ​

User Evan Laforge
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1 Answer

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22 votes

Step-by-step explanation:

Effective demand refers to a situation in which equilibrium output is determined solely by the level of aggregate demand. This is because of the assumption that supply is perfectly elastic. If there exists any difference between AD and AS, the equilibrium output will be determined only by AD.

User RobLL
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