The aggregate demand curve shows the relationship between planned purchases of
A) all final goods and services and interest rates.
B) all final goods and services and the price level.
C) all final goods and services and nominal GDP.
D) all final goods and services and total planned production.

Question

Quizplus · Accepted Answer

The aggregate demand curve shows the relationship between all final goods and services (represented by real GDP) and the price level. It reflects the planned purchases of goods and services by households, businesses, governments, and foreign buyers at various price levels. Interest rates and nominal GDP may be factors that influence aggregate demand, but they are not directly represented on the aggregate demand curve. Total planned production is not represented on the aggregate demand curve either, as it is reflected on the aggregate supply curve.

The Aggregate Demand Curve Shows the Relationship Between Planned Purchases