FIGURE 21-3 Refer to Figure 21-3.In this demand-determined model of the macro economy,the price level is A)measured by Y_2/0B. B)measured by Y₁Y_2/AB. C)increasing as the economy moves from E₀ to E₁. D)assumed to be constant. E)derived from the slope of the AE function.

Question

Quizplus · Accepted Answer

In a demand-determined model of the macro economy, the price level is assumed to be constant. This means as the level of output or aggregate demand changes, there will be no change in the price level.