The aggregate demand curve illustrates the
A) positive relationship between the price level and the quantity demanded of real gross domestic product (GDP).
B) positive relationship between the price level and the quantity demanded of nominal gross domestic product (GDP).
C) inverse relationship between the price level and the quantity demanded of real gross domestic product (GDP).
D) inverse relationship between the price level and the quantity demanded of nominal gross domestic product (GDP).
E) positive relationship between the level of spending and the level of real gross domestic product (GDP).

Question

Quizplus · Accepted Answer

The aggregate demand curve illustrates the inverse relationship between the price level and the quantity demanded of real gross domestic product (GDP). As the price level increases, people and firms demand less output and real GDP decreases. As the price level falls, the quantity demanded of real GDP increases, all other things being equal.

The Aggregate Demand Curve Illustrates the