When Looking at a Graph of Aggregate Demand, Which of the Following

question 59

Multiple Choice

When looking at a graph of aggregate demand, which of the following is correct?

• A)There are nominal variables on both the vertical and the horizontal axes.
• B)There are real variables on both the vertical and horizontal axes.
• C)The variable on the vertical axis is nominal; the variable on the horizontal axis is real.
• D)The variable on the vertical axis is real; the variable on the horizontal axis is nominal.

---

Definitions:

Perfectly Competitive

A market structure characterized by a large number of small firms, homogenous products, and free entry and exit, where no single firm has market power.

Variable Cost

Expenses that fluctuate with the level of output or business operations, contrasting with fixed costs.

Fixed Cost

Costs that do not change with the level of output produced, such as rent, salaries, and insurance premiums.

Economic Profit

The difference between total revenue and total economic costs (including both explicit and implicit costs), reflecting a firm's financial performance.