What term describes the cumulative demand for goods and services from households, businesses, and the government in an economy?

The term that describes the cumulative demand for goods and services from households, businesses, and the government in an economy is aggregate demand. Aggregate demand represents the total amount of demand for all final goods and services in an economy at a given overall price level and during a specified time period. It encompasses consumption by households, investment by businesses, government spending, and net exports (exports minus imports).

This concept is central to macroeconomic analysis because it illustrates how various sectors of the economy contribute to overall economic activity. A change in any of these components can shift aggregate demand, leading to potential impacts on economic output, employment, and inflation. Understanding aggregate demand is crucial for evaluating economic performance and formulating monetary and fiscal policies.

The other terms do not encapsulate this concept accurately: total demand implies a general concept of demand without the specific structure of aggregate components; aggregate supply refers to the total supply of goods and services produced in an economy at a given price level; and cumulative demand is a less commonly used term that does not specifically reflect the structure or interaction of different economic sectors.