The variables on the vertical and horizontal axes of the aggregate demand and supply graph are
A)the price level, real output.
B)real output, employment.
C)employment, the inflation rate.
D)the value of money, the price level.

Question

Quizplus · Accepted Answer

The vertical axis of the aggregate demand and supply graph represents the price level and the horizontal axis represents real output. Therefore, the correct variables on the vertical and horizontal axes are the price level and real output (Choice A). Employment and inflation rate are variables that may be affected by shifts in aggregate demand and supply, but they are not the primary variables represented on the axes of the graph. The value of money and the price level are closely related, but they are not both represented as variables on the axes of the graph.

The Variables on the Vertical and Horizontal Axes of the Aggregate