Defining the Aggregate Demand Curve

Steps:

• Recall that aggregate demand (AD) represents total spending on goods and services in an economy at different price levels.
• Identify the AD curve as plotting real GDP demanded against the overall price level, including consumption, investment, government spending, and net exports.
• Evaluate options by checking if they describe total demand across all sectors at varying price levels.
• Select the option that matches this economy-wide, price-level focus.

Why D is correct:

• D aligns with the standard definition: the AD curve illustrates total quantity of goods and services demanded at each price level, reflecting inverse relationship due to wealth, interest rate, and exchange rate effects.

Why the others are wrong:

• A: Focuses only on consumer goods, ignoring investment, government, and exports.
• B: Describes micro-level summation for a single product, not macro-level total demand.
• C: Limits to firms' demand (investment), excluding households, government, and foreign buyers.

Final answer: D