The AD Curve Relates the Price Level to Which of the Following

question 111

Multiple Choice

The AD curve relates the price level to which of the following?

• A)desired aggregate expenditure
• B)desired consumption
• C)the level of real GDP where desired AE equals actual national income
• D)the level of nominal GDP where desired AE equals actual national income
• E)equilibrium savings and wealth.

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Definitions:

Input Prices

The costs of raw materials and components required to produce a good or service.

Allocative Efficiency

Occurs when resources are distributed in a way that maximizes the net benefit to society.

Consumer Surplus

The difference between the maximum price a consumer is (or consumers are) willing to pay for an additional unit of a product and its market price; the triangular area below the demand curve and above the market price.

Net Benefit

Net benefit refers to the total positive effects or advantages of a decision or action, minus any costs or negative effects associated with it.