The globalized AS/AD model relates:
A)to tradable goods only.
B)directly to both tradable and non-tradable goods.
C)to tradable services only.
D)directly to tradable and indirectly to non-tradable goods.

Question

Quizplus · Accepted Answer

The globalized AS/AD (Aggregate Supply/Aggregate Demand) model directly relates to tradable goods because their prices and quantities are directly influenced by global supply and demand conditions. It relates indirectly to non-tradable goods because changes in the prices and quantities of tradable goods can affect the domestic economy, thereby influencing the demand for non-tradable goods.

The Globalized AS/AD Model Relates