Effective Demand, demand for material benefits and services guaranteed through the purchasers’ means. This embodies most social and personal requirements for the means of production and consumer goods. It is determined by the socio- political system, the structure of the social product, the national income, and the social character of its distribution. Under capitalism, the tendency towards expanding social production clashes with the inadequate growth of the people’s effective demand. In the pursuit of maximum profits, and in the course of fierce competitive struggle, the capitalists try to hold workers’ wages to a minimum, often below the cost of labour power. This tends to reduce the working people’s share of the national income, which diminishes the purchasing power of most consumers. The fact that the working people’s effective demand lags behind the expansion of capitalist production is one way in which the basic contradiction of capitalism manifests itself, and is one of the causes of the emergence of economic crises of overproduction. In socialist society, the steadily growing scale of production and of its effectiveness is the basis for increasing the real income of industrial, office and professional workers and collective farmers, and hence for a steady growth of effective demand. The correspondence between the supply and demand of consumer goods depends on several factors, such as the correlation between the consumption fund and the volume of production of consumer goods (and services); the rational utilisation of the accumulation fund, and the effectiveness of production assets; the correlation of the growth rates of Department I and Department II of social production; the correlation between the growth rates of the working people’s money incomes and labour productivity, the regulating role of prices, etc. All these factors are controlled by the socialist state in a planned way. An important condition of the market equilibrium of consumer goods and the fuller satisfaction of the people’s requirements is a systematic study of demand and its probable changes. An important role in the planned regulation of effective demand and goods turnover is played by the balance of money incomes and expenditures of the population. The growing efficiency of social production and the planned regulation of the economic ties between commodity producers and consumers by taking account of social requirements are the main instrument of expanding the production and sales of goods in conformity with the people’s requirements.