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Money Supply and Inflation

Intersection ...

Question

Intersection between aggregate demand and aggregate supply curves determines the point of _______ demand.

A

composite

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B

complementary

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C

effective

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D

joint

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Solution

The correct option is D effective
Effective demand is the aggregate actual demand at which the consumers are willing to pay as opposed to the notional demand. Hence, graphically, intersection between aggregate demand and aggregate supply curves determines the point of effective demand.

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