Use the Following Figure to Answer the Questions : Figure

question 39

Multiple Choice

Use the following figure to answer the questions : Figure 8.3:
-Given AD₁ and AS₁,if the average price level in Figure 8.3 were at P₃,

• A)A surplus would exist initially.
• B)The aggregate quantity demanded would exceed the aggregate quantity supplied.
• C)The average price level would rise.
• D)The equilibrium price level would be P3.

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Definitions:

Stop-Buy Order

An order placed with a broker to buy a security once it reaches a certain price, used to limit loss or protect profit.

Short-Sell

A trading strategy where an investor borrows a security and sells it on the open market, planning to buy it back later for less money.

Loss

The financial result of an activity when costs and expenses exceed the revenues or returns generated.

Bid and Ask Prices

The prices at which buyers are willing to buy (bid) and sellers are willing to sell (ask) a security or asset in the market.