Consider the Basic AD/AS Model with an Upward-Sloping AS Curve

question 84

Multiple Choice

Consider the basic AD/AS model with an upward-sloping AS curve.A positive aggregate demand shock will initially cause

• A)a decrease in the price level.
• B)the equilibrium point to move rightward along the AS curve.
• C)a movement along the AD curve to the right.
• D)a shift to the right in the AS curve.
• E)the unemployment rate to remain constant.

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Definitions:

Arbitrage

The simultaneous buying and selling of securities, currency, or commodities in different markets or in derivative forms to take advantage of differing prices for the same asset.

Price Discrimination

A pricing strategy where different prices are charged to different consumers for the same product or service, often based on their willingness to pay.

Deadweight Loss

The loss of economic efficiency that occurs when the equilibrium for a good or a service is not achieved or is unattainable.

Price Discriminate

The practice of selling the same product or service at different prices to different customers, often based on their willingness to pay.