The aggregate demand curve of an economy illustrates the relationship between:
A)interest rates and income levels.
B)the price level and real gross domestic product (GDP).
C)the price level and interest rates.
D)income levels and real gross domestic product (GDP).
E)real income levels and nominal income levels.

Question

Quizplus · Accepted Answer

The aggregate demand curve shows the relationship between the price level and real GDP. As the price level changes, there is a corresponding change in the quantity of goods and services demanded in the economy, which affects the level of real GDP. The relationship between interest rates and income levels, as well as the relationship between real income and nominal income, are not directly illustrated by the aggregate demand curve.

The Aggregate Demand Curve of an Economy Illustrates the Relationship