-Refer to Figure 11.1. Panels a) and b) of the Figure show the relationship between the:
A) short-run and the long-run equilibrium output.
B) planned aggregate expenditure curve and the aggregate demand curve.
C) real-balance effect and the interest-rate effect.
D) nominal and the real expenditure curves.

Question

-Refer to Figure 11.1. Panels a) and b) of the Figure show the relationship between the:
A) short-run and the long-run equilibrium output. 
B) planned aggregate expenditure curve and the aggregate demand curve. 
C) real-balance effect and the interest-rate effect. 
D) nominal and the real expenditure curves.

Quizplus · Accepted Answer

Panels a) and b) typically illustrate the relationship between the planned aggregate expenditure curve and the aggregate demand curve, showing how changes in planned spending at different price levels translate into shifts in the aggregate demand.