Consider the AD/AS Model After Factor Prices Have Fully Adjusted

question 83

Multiple Choice

Consider the AD/AS model after factor prices have fully adjusted to output gaps.An increase in the level of potential output,with aggregate demand constant,will

• A)affect only the price level.
• B)decrease real GDP and the price level.
• C)affect only the level of real GDP.
• D)increase real GDP and lower the price level.
• E)decrease real GDP and raise the price level.

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Definitions:

Salvage Value

The approximate salvage worth of an asset at its lifespan's conclusion.

Freight Charges

Freight charges are the costs incurred by a company for transporting goods, merchandise, or commodities from one place to another.

Straight-Line Basis

The straight-line basis is a method of calculating depreciation and amortization, dividing the cost of an asset evenly over its useful life.

Salvage Value

Salvage value is the estimated resale value of an asset at the end of its useful life, determining the leftover value after depreciation is taken into account.