Question

The aggregate demand curve:

A. is upsloping because a higher price level is necessary to make production profitable as production costs rise.
B. is downsloping because production costs decline as real output increases.
C. shows the amount of expenditures required to induce the production of each possible level of real output.
D. shows the amount of real output that will be purchased at each possible price level.

Answer 1

Option D,shows the amount of real output that will be purchased at each possible price level, is the right answer.

Step-by-step explanation:

In the context of macroeconomics, the emphasis is on the demand and the supply of all the goods and services produced in and by an economy. Since the focus is on all demand and all supply, the very phenomena of demand and supply are known as the aggregate demand and aggregate supply.

The visual representation of aggregate demand (demand for the total quantity of all the goods and services demanded by the people of an economy at varying prices) is known as the Aggregate demand curve. Accordingly, an aggregate demand curve is the means of representing the amount of real output that will be bought at each potential price level.