The ________ illustrates the relationship between the price level and the quantity of planned aggregate expenditure,holding constant all other factors that affect aggregate expenditure.
A)aggregate demand curve
B)savings line
C)45-degree line
D)consumption function

Question

Quizplus · Accepted Answer

The aggregate demand curve shows the relationship between the price level and the quantity of planned aggregate expenditure. It illustrates the quantity of goods and services that households, businesses, and governments are willing to buy at different price levels, while holding other factors constant. The aggregate demand curve is downward sloping because as the price level increases, consumers will have less purchasing power and will therefore decrease their demand for goods and services.

The ________ Illustrates the Relationship Between the Price Level and the Quantity