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The aggregate supply and aggregate demand model is used to explain the: Multiple Choice way that unemployment may affect output, but not how price level does
The aggregate supply and aggregate demand model is used to explain the: Multiple Choice way that unemployment may affect output, but not how price level does. interaction of all sellers and all buyers within a particular market. overall health of the economy. overall effect of large markets within the economy.
Expert Solution
ans.
The aggregate supply and aggregate demand model is an economic model that shows the determination of equilibrium real GDP and price level in an economy.
This model pertains to entire economy. This models states whether the actual real GDP in the economy is greater than or equal to or less than the potential real GDP.
Thus, this model indicates that whether the economy is in recessionary phase or in expansionary phase of the business cycle.
So,
The aggregate supply and aggregate demand model is used to explain the overall health of the economy.
Hence, the correct answer is the option (3) [overall health of the economy].
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