In a Diagram of Aggregate Demand and Supply Curves,the AD

question 21

Multiple Choice

In a diagram of aggregate demand and supply curves,the AD shortfall is measured as the

• A)Vertical distance between the equilibrium price and the price at which the aggregate demand would intersect aggregate supply at full employment.
• B)Horizontal distance between the equilibrium output and the full-employment output.
• C)Horizontal distance between the aggregate demand curve necessary for full employment and the aggregate demand curve that intersects AS at the equilibrium price.
• D)Vertical distance between the recessionary GDP gap and the inflationary GDP gap.

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Definitions:

First-Degree Price Discrimination

A pricing strategy where a seller charges each buyer their maximum willingness to pay, capturing all consumer surplus.

Peak-Load Pricing

A pricing strategy used to regulate demand by charging higher prices during peak times and lower prices during off-peak times.

Second-Degree Price Discrimination

A pricing strategy where prices vary based on the quantity of goods or services purchased, but not on the characteristics of the buyer.

Early Bird

A term typically used to describe someone who completes a task or arrives somewhere early, often to take advantage of benefits or discounts.