If the Economy Is in Macroeconomic Equilibrium with a Vertical

question 75

Multiple Choice

If the economy is in macroeconomic equilibrium with a vertical AS curve,and then aggregate demand decreases,we expect the AE function to shift to a

• A)higher level and stay there.
• B)higher level,but then shift part of the way down to its original position as the price level falls.
• C)higher level but then return to its original position as the price level falls.
• D)lower level and stay there.
• E)lower level,but then return to its original position as the price level falls.

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Definitions:

Sales Budget

A financial plan that estimates future sales volumes and revenues for a specific period.

Direct Materials

Direct materials are raw materials that are directly traceable to the manufacturing of a specific product and are an essential component of its production.

Production Budget

An estimate of the total units to be produced in a given period, considering forecasted sales and desired inventory levels.

Cash Receipts

The collection of money, including currency, checks, and electronic transfers, by a business.