The aggregate-demand curve
A)has a slope that is explained in the same way as the slope of the demand curve for a particular product.
B)is vertical in the long run.
C)shows an inverse relation between the price level and the quantity of all goods and services demanded.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

The aggregate-demand curve shows an inverse relationship between the price level and the quantity of all goods and services demanded. This is because as the overall price level in the economy increases, people can afford to buy less, reducing the aggregate demand for goods and services. In the long run, the aggregate-demand curve will be vertical because changes in the price level do not affect the quantity of output supplied, so any change in aggregate demand will only result in a change in the price level. The slope of the aggregate-demand curve is not explained in the same way as the slope of the demand curve for a particular product since it takes into account all goods and services in the economy.

The Aggregate-Demand Curve