Which Statement Best Describes the Aggregate Demand and Aggregate Supply

question 175

Multiple Choice

Which statement best describes the aggregate demand and aggregate supply model?

• A) Aggregate supply adjusts to equate aggregate demand at the prevailing market prices.
• B) The price level adjusts to equate aggregate demand to aggregate supply.
• C) Aggregate demand adjusts to equate aggregate supply at the prevailing market prices.
• D) Both aggregate demand and supply adjust to become equal at the prevailing market prices.

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Definitions:

Selling

The act of offering goods or services in exchange for money or other goods and services.

Trade Surplus

A situation where the value of a country's exports exceeds the value of its imports over a certain period of time.

Net Capital Outflow

The difference between the domestic country's purchase of foreign assets and foreign purchases of the domestic country's assets over a certain period, often reflecting the flow of funds abroad.

Domestic Investment

Expenditures made within a country by individuals, businesses, or the government for the purpose of acquiring goods and services to increase future production.