<P> Demand and supply have also been generalised to explain macroeconomic variables in a market economy, including the quantity of total output and the general price level . The Aggregate Demand--Aggregate Supply model may be the most direct application of supply and demand to macroeconomics, but other macroeconomic models also use supply and demand . Compared to microeconomic uses of demand and supply, different (and more controversial) theoretical considerations apply to such macroeconomic counterparts as aggregate demand and aggregate supply . Demand and supply are also used in macroeconomic theory to relate money supply and money demand to interest rates, and to relate labor supply and labor demand to wage rates . </P> <P> According to Hamid S. Hosseini, the power of supply and demand was understood to some extent by several early Muslim scholars, such as fourteenth - century Mamluk scholar Ibn Taymiyyah, who wrote: "If desire for goods increases while its availability decreases, its price rises . On the other hand, if availability of the good increases and the desire for it decreases, the price comes down ." </P> <P> John Locke's 1691 work Some Considerations on the Consequences of the Lowering of Interest and the Raising of the Value of Money . includes an early and clear description of supply and demand and their relationship . In this description demand is rent: "The price of any commodity rises or falls by the proportion of the number of buyer and sellers" and "that which regulates the price...(of goods) is nothing else but their quantity in proportion to their rent". </P> <P> The phrase "supply and demand" was first used by James Denham - Steuart in his Inquiry into the Principles of Political Economy, published in 1767 . Adam Smith used the phrase in his 1776 book The Wealth of Nations, and David Ricardo titled one chapter of his 1817 work Principles of Political Economy and Taxation "On the Influence of Demand and Supply on Price". </P>

The economic system in the united states is called capitalism