In Terms of the AD-AS Model, the New Classical Approach

question 7

Multiple Choice

In terms of the AD-AS model, the new classical approach indicates that an unexpected decrease in the money supply will affect output because it will cause

• A)the SRAS curve to shift down, whereas the AD curve will be unaffected.
• B)the SRAS curve to shift up, whereas the AD curve will be unaffected.
• C)the AD curve to shift to the left, whereas the SRAS curve will be unaffected.
• D)the AD curve to shift to the right, whereas the SRAS curve will be unaffected.

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Definitions:

Income Statement

A financial statement that reports a company's financial performance over a specific accounting period, detailing revenues, expenses, and profits.

Expenses

The costs incurred in the process of generating revenues, including costs of goods sold, operating expenses, and taxes.

Raw Materials

Basic materials that are used in the production process of manufacturing goods, often transformed into components or finished products.

Manufacturing Costs

Expenses directly related to the production of goods, including materials, labor, and overhead.