Which of the following is true?
A)Points along the aggregate supply curve show the equilibrium levels of output and prices that are consistent on the demand side of the economy.
B)Points along the aggregate demand curve show the equilibrium levels of output and prices that are consistent on the supply side of the economy.
C)Aggregate demand shows the levels of GDP and prices where expenditure decisions and production decisions match.
D)Aggregate supply shows the levels of GDP and prices where expenditure decisions and production decisions match.

Question

Quizplus · Accepted Answer

Aggregate demand shows the levels of GDP and prices where expenditure decisions and production decisions match. This is because aggregate demand represents the total amount of goods and services that consumers, businesses, and the government are willing and able to buy at different price levels, and it intersects with the aggregate supply curve to determine the equilibrium level of output and prices in the economy. Option A is incorrect because points along the aggregate demand curve represent the combination of output and prices that consumers and businesses are willing to buy at different levels of aggregate demand. Option B is incorrect because points along the aggregate supply curve represent the combination of output and prices that firms are willing and able to produce at different levels of input prices and productivity. Option D is incorrect because aggregate supply is influenced by factors such as technology, factor inputs, and government policies, which affect the cost of production and the profit margins of firms, rather than expenditure decisions.

Which of the Following Is True