What determines the equilibrium price level and the level of real domestic output in the aggregate demand–aggregate supply model?
What will be an ideal response?
The interaction of aggregate supply and aggregate demand will determine the equilibrium. The price and quantity levels where aggregate demand and aggregate supply are equal will be the equilibrium levels of price and quantity. In a graphical illustration such as Figure 30.7, it is where the two curves intersect.
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When the plans of buyers and sellers are fully coordinated
A) the market clears. B) there is neither a shortage nor surplus of a good. C) quantity demanded equals quantity supplied. D) all of the above are true.
The financial system is primarily a means by which
A) funds are transferred from savers to borrowers. B) money is put into circulation. C) the government puts into operation its plans for the economy. D) business firms distribute their goods.