The horizontal axis used in the aggregate demand curve measures:
A) the amount of all final goods and services included in real GDP.
B) the value of all final goods and services included in nominal GDP.
C) the value of all intermediate goods and services.
D) the value of all final goods and services included in real GDP.

Question

Quizplus · Accepted Answer

The horizontal axis used in the aggregate demand curve measures the value of all final goods and services included in real GDP. This is because the demand for goods and services is based on their real value, which takes into account inflation, and not just their nominal value. The horizontal axis therefore shows the level of real GDP that households, firms, and governments are willing to demand at different price levels.

The Horizontal Axis Used in the Aggregate Demand Curve Measures