The aggregate-demand curve shows the a. quantity of domestically produced goods and services that households want to buy at each price level. b. quantity of labor and other inputs that firms want to buy at each inflation rate. c. quantity of domestically produced goods and services that households, firms, the government, and customers abroad want to buy at each price level. d. quantity of labor and other inputs that firms want to buy at each price level.

The correct answer is C. The aggregate-demand curve shows the quantity of domestically produced goods and services that households, firms, the government, and customers abroad want to buy at each price level.

Explanation:

In macroeconomics, aggregate demand represents the demand for goods and services formulated by an economic system as a whole, in a certain period of time; as such it represents the potential to exploit the global production capacity of a certain economic system.

In economic modeling, the demand for goods is equated with the quantity of goods available, that is, in a first simple model, a goods market balance is postulated. However, the temporal income shifts due to saving, as well as the capital inflows and outflows of domestic and foreigners must then be taken into account. Price and capital effects such as inflation, deflation and money illusion should also be taken into account in the further discussion.

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