Which of the following best describes the aggregate demand and aggregate supply model?
A)Aggregate supply adjusts to equate aggregate demand at the prevailing market prices.
B)The price level adjusts to equate aggregate demand to aggregate supply.
C)Aggregate demand adjusts to equate aggregate supply at the prevailing market prices.
D)Both aggregate demand and supply adjust to become equal at the prevailing market prices.

Question

Quizplus · Accepted Answer

The aggregate demand and aggregate supply model shows the relationship between the overall level of prices in the economy and the quantity of goods and services that firms are willing to supply and consumers are willing to purchase. In this model, the price level adjusts to equate aggregate demand to aggregate supply, as changes in either aggregate demand or supply will cause a shift in the equilibrium price level.

Which of the Following Best Describes the Aggregate Demand and Aggregate