When looking at a graph of aggregate demand, which of the following is correct?
A)There are nominal variables on both the vertical and the horizontal axes.
B)There are real variables on both the vertical and horizontal axes.
C)The variable on the vertical axis is nominal; the variable on the horizontal axis is real.
D)The variable on the vertical axis is real; the variable on the horizontal axis is nominal.

Question

Quizplus · Accepted Answer

In a graph of aggregate demand, the vertical axis typically represents the price level, which is a nominal variable, and the horizontal axis represents real GDP or output, which is a real variable. This setup allows for the analysis of the relationship between the overall price level in the economy and the total output of goods and services, adjusted for inflation.

When Looking at a Graph of Aggregate Demand, Which of the Following