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Chapter 11: 20 (page 291)

What is on the horizontal axis of the AD/AS diagram? What is on the vertical axis?

Short Answer

Expert verified

Real GDP and price level are labeled horizontally and vertically on the AD and AS curves, respectively.

Step by step solution

01

Concept introduction

Aggregate demand curve depicts the link between the current price level in the economy and GDP when both the goods and money markets are in equilibrium.

Aggregate supply represents the total output of goods and services that an economy could deliver at a particular price level.

02

Explanation


The vertical axis represents price level, and the horizontal axis represents GDP, as seen in the diagram. The equilibrium level of price and output is determined by the intersection of aggregate demand and aggregate supply.

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