Answer:
The correct answer is C. The aggregate-demand curve shows the quantity of domestically produced goods and services that households, firms, the government, and customers abroad want to buy at each price level.
Explanation:
In macroeconomics, aggregate demand represents the demand for goods and services formulated by an economic system as a whole, in a certain period of time; as such it represents the potential to exploit the global production capacity of a certain economic system.
In economic modeling, the demand for goods is equated with the quantity of goods available, that is, in a first simple model, a goods market balance is postulated. However, the temporal income shifts due to saving, as well as the capital inflows and outflows of domestic and foreigners must then be taken into account. Price and capital effects such as inflation, deflation and money illusion should also be taken into account in the further discussion.
Answer:
B. quantity of domestically produced goods and services that households, firms, the government, and customers abroad want to buy at each price level.
Explanation:
In general, aggregate demand (Y) of an open economy is the addition of consumption (C), investment (I), government spending (G), and net exports (NX) represented as follows:
Y = C + I + G +NX
Where NX = Export (X) - Import (M)
Therefore, the aggregate demand curve is a graphical representation of the total quantity of all commodities demanded by households, firms and the government within an economy as well as foreigners at different aggregate price levels.
The measure of the aggregate price level is either the Consumer Price Index (CPI) or the GDP deflator.
The aggregate demand (AD) curve is downward sloping from left to right (see the attached) and it implies a negative relationship between the aggregated demand (or real GDP) and the aggregate price levels. That is, aggregate demand will fall when there is a rise in the aggregate price level.
