AP Macroeconomics Question 36: Answer and Explanation

Test Information

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Question: 36

10. The aggregate demand curve is

  • A. a horizontal summation of market demand curves
  • B. a horizontal summation of firm demand curves
  • C. a simple aggregation of demand curves for individual goods
  • D. a vertical summation of firm demand curves
  • E. not found by adding product demand curves horizontally or vertically

Correct Answer: E

Explanation:

E The aggregate demand curve is not a simple aggregation of individual demand curves for goods or firms. These demand curves indicate what happens when the price of one good changes relative to the price of other goods. The AD curve reflects changes in demand when the average price level for all goods increases or decreases.