Consider the Basic AD/AS Model

question 38

Multiple Choice

Consider the basic AD/AS model.If major labour unions succeed in increasing wages across the economy,the AS curve will shift

• A)downward (to the right),reducing the price level.
• B)downward (to the right)and then return immediately to its original position.
• C)upward (to the left)and then return immediately to its original position.
• D)upward (to the left),increasing the price level.
• E)None of the above; there will no effect on the AS curve.

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Definitions:

Accounts Receivable

Funds that are due to a business from its clients for goods or services already provided but not yet compensated for.

Liquidity Crisis

A situation where an entity lacks the liquidity necessary to meet its short-term obligations, potentially leading to insolvency.

Market Value

The current price at which an asset or service can be bought or sold in a competitive marketplace.