Final answer:
The money supply function is vertical, indicating that it is set by the central bank and not influenced by interest rates, while the aggregate demand curve is downward-sloping due to various economic effects. In financial and labor markets, supply and demand curves help explain the dynamics of loans and wages respectively.
Step-by-step explanation:
The money supply function is typically represented as vertical on a graph. This implies that the money supply is set by the central bank and does not change with the interest rate. In contrast, the aggregate demand (AD) curve is downward-sloping, representing the relationship between the price level for outputs and the quantity of total spending in the economy. It slopes down due to the wealth effect, interest rate effect, and foreign price effect. When discussing market dynamics, such as those involving the financial market or labor market, we often talk about supply and demand. In the financial market, an increase in the supply of loans will likely lead to an increase in the quantity of loans made and received. Similarly, in the labor market, the supply of labor curve is upward sloping, indicating that higher wages will attract more workers to the market.