Question

Which of the following is true? Aggregate supply shows the levels of GDP and prices where expenditure decisions and production decisions match. Aggregate demand shows the levels of GDP and prices where expenditure decisions and production decisions match. Points along the aggregate demand curve show the equilibrium levels of output and prices that are consistent on the supply side of the economy. Points along the aggregate supply curve show the equilibrium levels of output and prices that are consistent on the demand side of the economy.

Answer 1

Answer: The following statement is true; Aggregate demand reflect the scale of GDP and prices where cost and production decisions match.

Aggregate demand is an dismal assessment of the total demand for all commodities and services produced within the domestic boundaries. Aggregate demand can also be referred or asserted as money exchanged for these commodities and services at a certain price level. Here, it can also be stated that Aggregate demand states the scale of Gross Domestic Product and prices at which cost and production decisions match.