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Question
Effective demand is determined at the point of equality between aggregate demand and aggregate supply.
Effective demand is determined at the point of equality between aggregate demand and aggregate supply.
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Solution
The correct option is A True
The point at which aggregate
demand (AD) is equals aggregate supply (AS) is the point of effective demand because at this level there is no
tendency for income and output to change and the market is entirely clear.
The point at which aggregate demand (AD) is equals aggregate supply (AS) is the point of effective demand because at this level there is no tendency for income and output to change and the market is entirely clear.
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