Question

Which of the sentences concerning the aggregate demand and aggregate supply model is correct? question 11 options: the price level adjusts to bring aggregate demand and supply into balance. the aggregate demand and supply model is nothing more than a large version of the model of market demand and supply. all of the responses are correct. the aggregate supply curve shows the quantity of goods and services that households, firms, and the government want to buy at each price?

Answer 1

The correct answer is "The price level adjusts to bring aggregate demand and supply into balance". Although aggregate demand and supply model resembles simple market supply and demand, it is no the same as market demand and supply stem from individual choices whereas aggregate demand and supply is an overall macroeconomic model. It is aggregate demand curve that shows quantity of goods and services that households, firms, and the government want to buy at each price.