Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Identify the axes, draw the curves, label the equilibrium point
B
Draw the curves, identify the axes, label the equilibrium point
C
Label the equilibrium point, identify the axes, draw the curves
D
Identify the axes, label the equilibrium point, draw the curves
Understanding the Answer
Let's break down why this is correct
Answer
To accurately draw and label an aggregate demand and supply graph, start by drawing two axes: the vertical axis represents the price level, while the horizontal axis shows real GDP or output. Next, you need to plot the aggregate demand curve, which typically slopes downward from left to right, indicating that as the price level decreases, the quantity of goods and services demanded increases. After that, draw the aggregate supply curve, which usually slopes upward, showing that as prices rise, producers are willing to supply more goods and services. Finally, mark the point where the two curves intersect; this point represents the equilibrium price level and output, showing the balance between demand and supply. For example, if the intersection occurs at a price level of 100 and an output of 1,000 units, label those points clearly on your graph to convey the economic situation accurately.
Detailed Explanation
First, you need to identify the axes. Other options are incorrect because This option suggests drawing the curves before identifying the axes; Here, the equilibrium point is labeled first.
Key Concepts
Aggregate Demand and Supply Analysis
Graphical Representation in Economics
Equilibrium in Markets
Topic
Aggregate Demand and Supply Analysis
Difficulty
easy level question
Cognitive Level
understand
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