Which of the Following Statements Concerning the Aggregate Demand and Aggregate

question 516

Multiple Choice

Which of the following statements concerning the aggregate demand and aggregate supply model is correct?

• A)The aggregate demand and aggregate supply model is nothing more than a large version of the model of market demand and supply.
• B)The price level and quantity of output adjust to bring aggregate demand and supply into balance.
• C)The aggregate supply curve shows the quantity of goods and services that households, firms, and the government want to buy at each price.
• D)The aggregate demand shows the quantity of goods and services that firms are willing to produce at a given price level.

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Definitions:

Firm

A business organization, such as a corporation, partnership, or sole proprietorship, that sells goods or services to make a profit.

Economic Profits

The difference between total revenue and total costs, including both explicit and implicit costs, representing the additional gain beyond the normal profit level.

Implicit Costs

The opportunity costs of using resources owned by the firm for its own production rather than earning income elsewhere.

Accounting Profits

The net income reported on the financial statements of a company, calculated as total revenues minus explicit costs and depreciation.