The aggregate demand and aggregate supply graph has
A)quantity of output on the horizontal axis.Output can be measured by the GDP deflator.
B)quantity of output on the horizontal axis.Output can be measured by real GDP.
C)quantity of output on the vertical axis.Output can be measured by the GDP deflator.
D)quantity of output on the vertical axis.Output can be measured by real GDP.

Question

Quizplus · Accepted Answer

The quantity of output is typically measured by real GDP, which adjusts for changes in prices. Therefore, the horizontal axis of the aggregate demand and aggregate supply graph represents real GDP. The vertical axis represents the price level, which can be measured by the GDP deflator.

The Aggregate Demand and Aggregate Supply Graph Has