Aggregate Demand (AD) refers to the total quantity of goods and services that all consumers, businesses, and the government are willing to purchase at various price levels in an economy. It is represented by the formula AD = C + I + G + (X - M), where C is consumption, I is investment, G is government spending, X is exports, and M is imports. AD plays a crucial role in determining overall economic activity and growth. When aggregate demand increases, it can lead to higher production, more jobs, and economic expansion. Conversely, a decrease in aggregate demand can result in lower output, rising unemployment, and potential recession.