Assuming velocity is constant, the aggregate demand curve tells us possible:
A)combinations of M and Y for a given value of P.
B)combinations of M and P for a given value of Y.
C)combinations of P and Y for a given value of M.
D)results if the Bank of Canada reduces the money supply.

Question

Quizplus · Accepted Answer

The aggregate demand curve shows the relationship between the price level (P) and the output (Y) for a given money supply (M), assuming velocity is constant.

Assuming Velocity Is Constant, the Aggregate Demand Curve Tells Us