Which of the following statements concerning the aggregate demand and aggregate supply model is correct?
A) The aggregate demand and aggregate supply model is nothing more than a large version of the model of market demand and supply.
B) The price level and quantity of output adjust to bring aggregate demand and supply into balance.
C) The aggregate supply curve shows the quantity of goods and services that households, firms, and the government want to buy at each price.
D) All of the above are correct.

Question

Quizplus · Accepted Answer

The aggregate demand and aggregate supply model is used to analyze the overall level of output and prices in an economy. It is different from the model of market demand and supply, as it includes not only consumer and producer behavior but also government spending, international trade, and monetary policy. In this model, the price level and quantity of output adjust to bring aggregate demand and supply into balance, with changes in one affecting the other. The aggregate supply curve shows the quantity of goods and services that producers are willing to sell at each price level, based on their costs of production.

Which of the Following Statements Concerning the Aggregate Demand and Aggregate