What does aggregate demand represent in economics?

Aggregate demand represents the total quantity of goods and services demanded in an economy at a given overall price level, which is a fundamental concept in macroeconomics. It reflects the relationship between the total demand for these goods and services and the price levels in the economy. As the price level changes, the quantity of goods and services demanded can also change, which is illustrated in the downward-sloping aggregate demand curve. This concept helps in analyzing economic fluctuations, understanding inflation, and the overall health of the economy, making it a cornerstone of macroeconomic theories and models.

The other choices do not accurately capture the definition of aggregate demand. The total quantity of welfare services demanded pertains specifically to the welfare sector and does not encompass all goods and services. The total amount of money in circulation refers to the money supply in an economy, which is a different concept that affects aggregate demand but does not define it. Lastly, the total income generated by all businesses describes gross income or output but does not address the demand aspect, which focuses on how much quantity is being sought out by consumers and businesses at any given price level. Therefore, the definition of aggregate demand is best encapsulated by the total quantity of goods and services demanded at a given price level.