In economics, effective demand in a market is the demand for a product or service which occurs when purchasers are constrained in a different market. It contrasts with notional demand, which is the demand that occurs when purchasers are not constrained in any other market. In the aggregated market for goods in general, effective demand is the same thing as aggregate demand when the demand for goods is influenced by spillovers from quantity constraints from other markets. The concept of effective supply parallels the concept of effective demand. The concept of effective demand or supply becomes relevant when markets do not continuously maintain equilibrium prices.
Read more about Effective Demand: Examples of Spillovers, History, The Effective Demand Principle
Famous quotes containing the words effective and/or demand:
“I know no method to secure the repeal of bad or obnoxious laws so effective as their stringent execution.”
—Ulysses S. Grant (1822–1885)
“That whatever a man says, promises, or resolves in passion he must stick to later on when he is cold and sober—this demand is among the heaviest burdens that weigh on humankind.”
—Friedrich Nietzsche (1844–1900)