A Shift of the AD Curve

question 64

Multiple Choice

A shift of the AD curve

• A)to the right is considered expansionary, and a shift to the left is considered contractionary.
• B)to the left is considered expansionary, and a shift to the right is considered contractionary.
• C)to the right or to the left is considered contractionary.
• D)to the right or to the left is considered expansionary.

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Definitions:

Operating Income

The profit realized from a business's operations, calculated by subtracting operating expenses from gross profit.

Fixed Costs

Expenses that do not change in proportion to the activity of a business, such as rent, salaries, and insurance premiums.

Flexible Budget

A budget that adjusts or varies with changes in the volume of activity, providing a more useful tool for performance evaluation.

Variable Costs

Costs that change in proportion to the level of activity or production volume, such as raw materials and direct labor.