The Labels for the Axes of the Aggregate Demand Graph

question 13

Multiple Choice

The labels for the axes of the aggregate demand graph should be:

• A) Quantity of a product on the vertical axis and the price of a product on the horizontal axis
• B) Price of a product on the vertical axis and quantity of a product on the horizontal axis
• C) Real domestic output on the vertical axis and the price level on the horizontal axis
• D) Real domestic output on the horizontal axis and the price level on the vertical axis

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Definitions:

Forward Rate

The agreed upon exchange rate for a currency transaction that will occur at a future date.

Spot Price

The current market price at which an asset can be bought or sold for immediate delivery.

Canadian Dollars

The currency of Canada, symbolized as CAD, and used throughout the country.

Exchange Rate

In international finance, the rate at which one currency can be traded for another. Spot rates are available for current trades. Forward rates are available for currency to be delivered in a specified period of time.