The price index used to illustrate the aggregate demand curve is the
A) gross domestic product (GDP)deflator.
B) consumer price index.
C) producer price index.
D) nominal price index.
E) real price index.

Question

Quizplus · Accepted Answer

The GDP deflator is a price index that measures the average level of prices of all goods and services produced in an economy. It is a better choice than the consumer price index or producer price index because it includes all goods and services, not just consumer goods or goods produced by producers. The nominal price index is not adjusted for inflation, and the real price index is not commonly used in illustrating the aggregate demand curve.

The Price Index Used to Illustrate the Aggregate Demand Curve