12) The aggregate demand and supply model in Chapter 5 A) differs in terms of underlying economics from the demand and supply model used in microeconomics B) uses the term "price" for the average price level of all the goods and services we buy C) uses an AS-curve that is vertical in the long run and horizontal in the very short run D) all of the above
The supply and demand model in micro economics explains the demand and supply for a single product or single industry. But the aggregate demand and aggregate supply explains the total demand in the economy and total supply in the economy.
The demand and supply model in microeconomics explains the price of a single product or service. But aggregate demand and supply model explains the average price level.
The aggregate supply curve is vertical in longrun and horizontal in very shortrun.
Answer: D. All the above.
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