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

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?
A)1 
B)2 
C)3

Quizplus · Accepted Answer

The Great Depression was marked by a significant decline in aggregate demand. Graph 2 in Figure 5-3 shows a leftward shift in the aggregate demand curve, which would result in a decrease in both real GDP and price level.

Aggregate Demand and Supply Curves Have Been Widely Used to Analyze