The aggregate demand function shows the total demand for goods and services at each level of income. The graphical representation of the aggregate demand function will have which of the following features?

(A) It can be obtained by vertically adding the consumption and investment function.
(B) It is parallel to the consumption function i.e., they have the same slope c.
(C) It shows ex post demand.
(D) It shows ex ante demand.

Choose the correct answer from the options given below:

(A), (B) and (D) only

The correct answer is Option (1) → (A), (B) and (D) only

(A) It can be obtained by vertically adding the consumption and investment function – Correct. The aggregate demand (AD) function is derived by adding investment (I) to the consumption function (C) at each level of income: AD=C+I

(B) It is parallel to the consumption function i.e., they have the same slope c – Correct. Since investment (I) is autonomous (constant), the slope of the AD function remains the same as that of the consumption function, which is ‘c’ (marginal propensity to consume).

(C) It shows ex post demand – Incorrect. The AD function represents planned (intended or ex ante) demand, not actual (ex post) demand.

(D) It shows ex ante demand – Correct. The aggregate demand function refers to planned expenditure on goods and services at various levels of income.