Which of the following best describes the relationship illustrated by the aggregate demand (AD) curve?

Choose 1 answer:

A The positive relationship between the price level and the quantity of aggregate output demanded by households, firms, the government, and the rest of the world

B It shows that there is no relationship between the price level and the amount of output demanded
(c) The inverse relationship between the price level and the quantity of aggregate output demanded by households, firms, the government, and the rest of the world
(D) The positive relationship between the price level and the quantity of total output produced by firms and households
(E) The inverse relationship between the price of a good and the quantity demanded of that good

Question

Which of the following best describes the relationship illustrated by the aggregate demand (AD) curve?

Choose 1 answer:

A The positive relationship between the price level and the quantity of aggregate output demanded by households, firms, the government, and the rest of the world

B It shows that there is no relationship between the price level and the amount of output demanded
(c) The inverse relationship between the price level and the quantity of aggregate output demanded by households, firms, the government, and the rest of the world
(D) The positive relationship between the price level and the quantity of total output produced by firms and households
(E) The inverse relationship between the price of a good and the quantity demanded of that good

Accepted Answer

∻Solution by Steps∻ ‖ step 1 ⋮ To understand the relationship illustrated by the aggregate demand (AD) curve, we need to recall the basic definition of the AD curve in macroeconomics. ‖ ‖ step 2 ⋮ The AD curve represents the total quantity of all goods and services demanded by the economy at different price levels, holding all else constant (ceteris paribus). ‖ ‖ step 3 ⋮ The AD curve typically has a downward slope, indicating an inverse relationship between the price level and the quantity of aggregate output demanded. This is because as the price level decreases, the purchasing power of money increases, leading to an increase in the quantity of goods and services demanded. ‖ ∻Answer∻ ***C*** ∻Key Concept∻ ⚹Inverse Relationship of AD Curve⚹ ∻Explanation∻ ⚹The aggregate demand curve shows the inverse relationship between the price level and the quantity of aggregate output demanded.⚹◊What is the relationship between price level and the quantity of aggregate output demanded according to the aggregate demand (AD) curve⍭ Generate me a similar question◊

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