Answer to Question #95232 in Macroeconomics for komal

Question

explain how aggregate demand is determined within the classical model .What would be the effect on output and price level drop the moeny suppl?

Answer 1

According to the classical model, aggregate demand is predetermined by money supply, i.e. the amount of money and their purchasing power.

Aggregate demand is an economic aggregate that can be defined as the real volume of national production that households, firms and the state are willing to buy at every possible price level.