The aggregate demand curve shows the quantity of:
A)Nominal output demanded at each level of inflation
B)Real output demanded at each level of inflation
C)Output made available at each level of inflation
D)Real output demanded at each level of real interest rate

Question

Quizplus · Accepted Answer

The aggregate demand curve shows the quantity of real output demanded at each level of inflation. It illustrates the relationship between the general price level (inflation) and the level of real output demanded by households, firms, and the government. It is usually downward sloping because as the price level increases, the purchasing power of consumers and the profitability of firms decrease, leading to a decrease in the quantity of real output demanded.

The Aggregate Demand Curve Shows the Quantity Of