The aggregate demand curve plots
A) desired expenditures against production.
B) total expenditures against the level of employment.
C) planned expenditures against the price level.
D) employment against the price level.

Question

Quizplus · Accepted Answer

The aggregate demand curve shows the planned expenditures of households, businesses, government, and foreign buyers at different price levels. Therefore, it plots planned expenditures against the price level. Choice A is incorrect because it doesn't include all of the factors of aggregate demand, like government and foreign buyers. Choice B is incorrect because it's measuring total expenditures against employment, rather than planned expenditures against the price level. Choice D is incorrect because it's only measuring employment against the price level, rather than planned expenditures.

The Aggregate Demand Curve Plots