Which of the following is a TRUE statement?
A) The C + I + G + X curve has no relationship to the aggregate demand curve other than some of the variables that affect one curve also affect the other.
B) The C + I + G + X curve is used to derive the aggregate demand curve, but the C + I + G + X curve is drawn for one price level while price levels vary along the aggregate demand curve.
C) The C + I + G + X curve is used to derive the aggregate demand curve, but the aggregate demand curve is drawn for one price level.
D) Both the C + I + G + X curve and the aggregate demand curve are drawn for one price level.

Question

Quizplus · Accepted Answer

The C + I + G + X curve, which represents Consumption + Investment + Government spending + Net exports, is indeed used to derive the aggregate demand curve. However, the key difference is that the C + I + G + X curve is typically considered at a single price level, whereas the aggregate demand curve reflects the relationship between the overall price level in the economy and the total demand for goods and services, thus incorporating different price levels.

Which of the Following Is a TRUE Statement