Answer to Question #111092 in Macroeconomics for zukile

Question #111092

Which of the following best describes the relationship illustrated by the aggregate demand (AD) curve?
1. The inverse relationship between price and quantity demanded for any product.
2. The negative relationship between the price level and levels of total production.
3. It shows no relationship between the price level and real GDP demanded.
4. The inverse relationship between the price level and real output demanded.

Expert's answer

The correct answer is: 4. The inverse relationship between the price level and real output demanded.

The aggregate demand focuses on the total final goods and services that are demanded in an economy at different price levels.