Which of the Following Is True About How the Aggregate

question 258

Multiple Choice

Which of the following is true about how the aggregate demand curve differs from the individual's demand curve?

• A) The individual's demand curve shows the relationship between price and quantity demanded while the aggregate demand curve is not influenced by price.
• B) For the individual's demand curve equilibrium is determined by the intersection of supply and demand while for the aggregate demand curve equilibrium is determined by the real balance effect.
• C) The individual's demand curve is just for an individual while the aggregate demand curve looks at the entire circular flow of income.
• D) The individual's demand curve will shift when there is a change in taxes while the aggregate demand curve will not.

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Definitions:

Opportunity Cost

The cost of forgoing the next best alternative when making a decision or taking an action.

Autarky

A national economic policy aimed at self-sufficiency, avoiding the import of foreign goods.

Netherlands

A country located in Northwestern Europe known for its flat landscape, extensive canal systems, tulip fields, windmills, and cycling routes.

Belgium

A country in Western Europe known for its medieval towns, Renaissance architecture, and as the headquarters of the European Union and NATO.