ECONOMICS
AGGREGATE DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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price level
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price
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Real GDP
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Nominial GDP
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Detailed explanation-1: -In the AD/AS model, the horizontal axis depicts the total output of the economy (Real GDP) whereas the aggregate price level on the vertical axis.
Detailed explanation-2: -The x axis actually shows real (gross) output not GDP per se. Real GDP is an estimate of real output.
Detailed explanation-3: -The aggregate demand graph On the x-axis, we have the real GDP, which represents the amount of output in an economy.
Detailed explanation-4: -The horizontal axis of the diagram shows real GDP-that is, the level of GDP adjusted for inflation. The vertical axis shows the price level. Price level is the average price of all goods and services produced in the economy.
Detailed explanation-5: -Key Features of the AD-AS model Two axes: a vertical axis labeled “Price level” or “PL” and a horizontal axis labeled “real GDP.”