Question:
The diagram shows an aggregate demand curve (AD). What is measured on the horizontal axis?
(1) Nominal national income
(2) Nominal national output
(3) Nominal disposable income
(4) Real gross domestic product
(5) Potential level of output
Correct Answer:
(4)
Answer Explanation:
In the standard macroeconomic Aggregate Demand and Aggregate Supply (AD-AS) model, the vertical axis measures the general Price Level (inflation), while the horizontal axis always measures the total volume of physical output produced by the economy, which is Real Gross Domestic Product (Real GDP).
Topic: Macroeconomics Year: 2024
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