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:

Option 1 -> States (A), (B) and (D) are correct. Statement (A) is correct as aggregate demand AD = C + I is obtained by vertical summation. Statement (B) is correct because if I is autonomous, AD and C have the same slope (MPC). Statement (D) is correct as AD represents planned/ex ante demand, not realized/ex post demand. This option correctly excludes (C).

Option 2 -> Incorrectly includes statement (C) which claims AD shows ex post demand, when it actually shows ex ante (planned) demand.

Option 3 -> Incorrectly includes all statements including (C), which is wrong as the AD function represents planned demand (ex ante), not actual/realized demand (ex post).

Option 4 -> Incorrectly includes statement (C) and excludes statement (A). Statement (A) is correct as AD is derived by vertically adding C and I functions.

Hence, Option 1: (A), (B) and (D) only -> The aggregate demand function AD = C + I is graphically obtained by vertically adding consumption and investment functions (A is correct). When investment is autonomous, AD = (a + I) + bY has the same slope 'b' (MPC) as the consumption function C = a + bY, making them parallel (B is correct). The AD function represents ex ante (planned) demand, not ex post (actual/realized) demand, so D is correct but C is incorrect. -> correct