Economics is a very vast subject matter if we learn through a book but it is all about common sense if we learn through using reality circumstance. Here I am going to explain about aggregate demand and supply. In my opinion aggregate demand never be higher than aggregate supply. Demand for a particular product and service, in a particular area, maybe higher than its supply but in overall demands never be higher than supply.
We know that every person has a limited capacity to create demand for any products and services, it depends on personal income. Total incomes should be less than its total value of all products and services that’s why total demands never are higher than its supplies. I want to more clarify by example, assumed that there is one country where 3 people are living, among them person A has bread shop, he has been making bread by hiring 2 employees and 100 pieces of bread are made in a day. And 2 employees have been given 30 euro each person. And person A has fixed price of 1 bread is 1 euro. In this condition happen in our whole economic system. by using all money what they have earned from salary even cannot create more demand than its supply. somebody can think that credit facilities can create more demand but it is also not possible if one-person deposit to bank his total income than he cannot create demand. That’s why it is also impossible to create more demand by using a loan.
Sometime somewhere a few products and services might be sold at less price than its cost price this situation cannot go long period if business continuously getting lost then the business must be closed. That’s why we can say that aggregate demands never be higher than its supply.
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