Which of the sentences concerning the aggregate demand and aggregate supply model is correct?
A) The aggregate demand and aggregate supply model is nothing more than a large version of the model of market demand and supply.
B) The price level and quantity of output adjust to bring aggregate demand and supply into balance.
C) The aggregate supply curve shows the quantity of goods and services that households,firms,and the government want to buy at each price.
D) All of the above are correct.

Question

Quizplus · Accepted Answer

The correct statement is that the price level and quantity of output adjust to bring aggregate demand and supply into balance. Option A is incorrect because the aggregate demand and supply model takes into account not just the market demand and supply, but also the demand and supply from households, firms, and the government. Option C is incorrect because the aggregate supply curve shows the quantity of goods and services that producers are willing to supply at each price level, not the quantity that households, firms, and the government want to buy. Option D is incorrect because only option B is correct.

Which of the Sentences Concerning the Aggregate Demand and Aggregate