Read the two statements and choose the correct option.
I. Aggregate demand is planned spending at each level of income.
II. In the simple Keynesian model, aggregate supply is shown by the 45° line.

Only ICorrect answerYour answerOnly IICorrect answerYour answerBoth I and IICorrect answerYour answerNeither I nor IICorrect answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer C

Correct answer: C

AD is a schedule of planned spending. I is true.
Along the 45° line, spending equals income, so it shows every point where output and income match. II is true.

Ten questions from Aggregate Demand, Consumption & Saving, at your own pace.

Ten questions from Aggregate Demand, Consumption & Saving, at your own pace.

Read the two statements and choose the correct option.I. Aggregate demand is planned spending at each level of income.II. In the simple Keynesian model, aggregate supply is shown by the 45° line.