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:

Demand Curve

A graphical representation of the relationship between the price of a good and the quantity of the good that consumers are willing and able to purchase.

Demand Elastic

Demand elasticity measures how sensitive the quantity demanded of a good or service is in response to a change in its price.

Perfectly Elastic

Describing a situation in which the demand or supply for a good or service is infinitely responsive to changes in price.

Percentage Change

A mathematical calculation that describes the degree of change over time, representing the difference as a percentage of the original figure.