Question

g The model of aggregate demand and aggregate supply explains the relationship between a. the price and quantity of a particular good. b. unemployment and output. c. wages and employment. d. real GDP and the price level.

Answer 1

The correct answer is (A)

Step-by-step explanation:

The model of aggregate demand and aggregate supply explains the relationship between the price of a good and the quantity of same good.

What do we mean by quantity? Quantity here could be quantity demanded or quantity supplied.

The model of Aggregate Demand explains how price of a good affects the general or aggregate demand for that goods and how demand in turn affects price. The law of demand states that, all other things being equal, the higher the price of a good, the lower the quantity demanded of that good and vice versa.

The model of Aggregate Supply explains how the price of a good affects the quantity supplied and the law of supply states that if there's an increase in the price of a good, producers will be encouraged to supply more and vice versa; ceteris paribus!

For the other options, there are macro theories or models that explain them.

Answer 2

The correct answer is the option D: real GDP and the price level.

Step-by-step explanation:

To begin with, the "model of aggregate demand and aggregate supply" is the name given to an economy model created by John Keynes many years ago and whose main purpose is to show in a graphic the existing relationship established by Keynes between the price level and the production level. Therefore that, as it is known, the GDP comprehends the production level in this model and it is used in order to try to predict the possible effects that some external factors may have in both the real GDP and the price level.