Consider the basic AD/AS model.Real GDP is demand determined along the
A)upward-sloping portion of the AS curve.
B)downward-sloping portion of the AS curve.
C)vertical portion of the AS curve.
D)horizontal portion of the AS curve.
E)None of the above - real GDP cannot be demand determined.

Question

Quizplus · Accepted Answer

In the basic Aggregate Demand/Aggregate Supply (AD/AS) model, real GDP is demand determined along the horizontal portion of the AS curve, which represents a situation where there are idle resources and the economy can increase output without increasing the price level.

Consider the Basic AD/AS Model