Aggregate demand refers to demand for all goods and services in the economy during a given period of time. The components of Aggregate demand in a two sector economy are :
(i) Consumption Expenditure (c) It is that portion of the income which is spend on purchase of goods and services by the consumers in an economy during the accounting period.
(ii) Investment Expenditure (I) - The addition to the stock of physical capital and change in inventories of a firm in an economy.