Suppose that along the aggregate demand curve, real GDP equals $15 trillion when the GDP deflator is 90. If the GDP deflator were 95, real GDP along the aggregate demand curve would equal
A) less than $15 trillion.
B) $15 trillion.
C) more than $15 trillion but less than $15.8 trillion.
D) more than $15 trillion.

Question

Quizplus · Accepted Answer

The aggregate demand curve shows the relationship between the price level (measured by the GDP deflator) and the quantity of output demanded. As the price level increases (from a GDP deflator of 90 to 95), the quantity of real GDP demanded decreases, hence it would be less than $15 trillion.

Suppose That Along the Aggregate Demand Curve, Real GDP Equals