Aggregate demand and supply curves have been widely used to analyze the performance of the macroeconomy. Figure 5-3 shows four diagrams that represent different changes in the macroeconomy. Choose the diagram that best represents the situations described in the following questions. Figure 5-3

Which graph in Figure 5-3 best represents the aggregate demand-induced Great Depression of the 1930s?
A) 1
B) 2
C) 3
D) 4

Question

Aggregate demand and supply curves have been widely used to analyze the performance of the macroeconomy. Figure 5-3 shows four diagrams that represent different changes in the macroeconomy. Choose the diagram that best represents the situations described in the following questions. Figure 5-3

Which graph in Figure 5-3 best represents the aggregate demand-induced Great Depression of the 1930s?

Which graph in Figure 5-3 best represents the aggregate demand-induced Great Depression of the 1930s?
A) 1 
B) 2 
C) 3 
D) 4

Quizplus · Accepted Answer

The aggregate demand-induced Great Depression of the 1930s is characterized by a decrease in aggregate demand. Graph 2 shows a leftward shift of the aggregate demand curve, resulting in a decrease in both output and price level.

Aggregate Demand and Supply Curves Have Been Widely Used to Analyze