The aggregate demand curve shows the:
A)inverse relationship between the price level and real GDP purchased.
B)direct relationship between the price level and real GDP produced.
C)inverse relationship between interest rates and real GDP produced.
D)direct relationship between real-balances and real GDP purchased.

Question

Quizplus · Accepted Answer

The aggregate demand curve shows the inverse relationship between the price level and real GDP purchased. As the price level increases, the purchasing power of consumers decreases, leading to a decrease in the quantity of goods and services demanded, and real GDP decreases. Conversely, as the price level decreases, the purchasing power of consumers increases, leading to an increase in the quantity of goods and services demanded, and real GDP increases.

The Aggregate Demand Curve Shows The