In the aggregate demand and supply model,the:
A) vertical axis measures the average price level.
B) horizontal axis measures real GDP.
C) aggregate supply curve is vertical at full-employment real GDP.
D) All of the above.

Question

Quizplus · Accepted Answer

All of the options are correct statements in the aggregate demand and supply model. The vertical axis measures the average price level, while the horizontal axis measures real GDP. The aggregate supply curve is vertical at full-employment real GDP, indicating that beyond that point, increases in demand will primarily result in higher prices rather than increased production.

In the Aggregate Demand and Supply Model,the