Which of the following is illustrated by the aggregate demand curve?
A. How real personal income varies with the price level.
B. How real output varies with the inflation rate.
C. How total quantity of output demanded varies with the average price level.
D. How real personal income varies with the inflation rate.
Answer: C
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Everything else the same, if government expenditure increases by $400 billion and imports increase by $400 billion, then GDP
A) increases by $400 billion. B) increases by $200 billion. C) decreases by $400 billion. D) does not change. E) decreases by $200 billion.
Markets fail to allocate resources efficiently when
a. prices fluctuate. b. people who have property rights abuse their privileges. c. property rights are poorly enforced or not well established. d. the government refuses to intervene in private markets.