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A-Level Economics · AD/AS equilibrium diagram question

What does the HORIZONTAL axis of this diagram measure?

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The diagram

The answer

Real output — real GDP, the volume of goods and services actually produced. Real output — real GDP. A rise from Y₁ to Y₂ IS economic growth, by definition. Price level on the vertical axis, real output on the horizontal. Real GDP rising is the definition of economic growth — which is why the whole macro course is read off this one pair of axes.

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This is one of 6 questions on the ad/as equilibrium diagram — every corner lettered, every wrong answer diagnosed.

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