Chapter 13, Problem 15AA

To determine

To state: The point where the aggregate demand and supply curve cross each other.

Explanation of Solution

The aggregate demand curve shows the connection between the total quantity demanded and the average of all prices. On contrary, aggregate supply curve shows the connection between the quantity supplied and the average of all prices.

Both this curve crosses each other at the equilibrium price level. This is the level at which the amount of goods supplied is equal to the amount of goods demanded.

Economics Concept Introduction

Introduction:

Aggregate demand- The aggregate demand is the total of all planned expenditures that are made in an economy. As the prices of products vary from one another, this cannot be related to individual prices rather it is related to the price level.

Aggregate supply- The aggregate supply is the total output that can be made by the producers on the basis of rise and fall of the price level.